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Jan Husdal

Business risks are everywhere?

Posted by Jan Husdal in Jan Husdal's Blog on Jan 20, 2011 7:15:51 AM

My personal blog on supply chain risk (not this blog) does not go unnoticed in the book publishing world, and from time to time I am approached by publishers and authors who would like me to review or even endorse their book, and I have become aware of - or rather made aware of - many books on risk and supply chain management that I didn't know existed. I take such review requests as a compliment for my writing style, and those of you who follow my personal blog will know that I do not shy away from criticism where criticism is due, and conversely, I also give praise where praise is due.

 

Currently I am working on the "Gower Short Guide to Business Risk Series", a collection of small books that deal with all sorts of business risks, so far covering topics such as

 

- procurement risk,

- reputation risk,

- political risk,

- fraud risk,

- ethical risk,

- customs risk,

 

and with more topics on the bedding, including

 

- operational risk,

- compliance risk,

- kidnap and ransom risk,

- corruption  risk,

- equality risk, and

- how to facilitate risk management,

 

there is more than enough to work on. Nonetheless, while working on this, I keep asking myself, is there really this much risk or is it just scaremongering? And how does all of this this relate to supply chain management?

 

Well, in todays globalized and outsourced business world supply chains are increasingly getting longer, more complex and more difficult to manage, and the manging side is located further and further away from the postential source of problems. Consequently, businesses are less and less in control of risk sources, but more and more in control (or perhaps not) of risk impacts or consequences, and I don't think that risk will ever run out of fashion.

I find risk a fascinating subject to work with and to blog about, from the highly academic writings on how to define risk, to the more hands-on practical handbooks on how to manage risk, although I do prefer the latter over the former.

 

One of my my most recent acquaintences in risk is David Simchi-Levi's book "Operations Rules". This book is about the principles, frameworks and processes that enable  the aligning of a company’s specific customer value proposition with its  operations strategy. Now, that sounds very supply chain and operations management only, but lo and behold, it is one of the very few books on supply chain mangement that features an extensive chapter on risk mangement. It is perhaps not fair to judge the importance of a chapter by its  length, but fact is that the chapter on risk mitigation is 30 pages,  while most other chapters are 15-17 pages, and it is not because this  chapter is full of figures. It is, but so are the other chapters, too.  To me this is a clear indication that Simchi-Levi sees risk mitigation  as an integral part of operations and supply chain management.

 

The   book is built around 33 rules that cover all possible aspects of   supply  chain operations and management, and that are placed throughout   the  eleven chapters of the book, hence the title. Simchi-Levi is a true well of knowledge as far as supply chain    management is concerned, and it shows. Not only are his rules based on a  plethora of examples and anecdotes of firms that succeed or failed in  their risk management, the examples themselves have a broad scope, in  geography, in impact and in industry. Simchi-Levi has  done his homework with this one. There is hardly a point made that is  not followed by an example, e.g. CEMEX seeing risk management as a core competence or the very different strategies of Nokia and Ericsson in handling the Philips plant fire.

 

In conclusion, I think there's hardly a business decision that is not wrought with risk, one way or the other, and the sooner risk management becomes integrated with supply chain mangement, the better.

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