LOGISTICS
“ When it comes to unplanned changes , people ' s risks registers will be three times as long as they ' ve ever been , because of Suez , because of chip shortages , because of Brexit , because of Covid ”
MARCUS JEFFERY IVANTI ’ S UK AND IRELAND SUPPLY CHAIN MANAGER
Such events are classed as “ unknown risks ” to businesses , and too many supply chains remain vulnerable to their ill-effects . We need look no further than the Covid-19 pandemic to know this , with countless businesses unable to keep pace with soaring demand , and then being further compromised by widespread labour shortages and haulage headaches .
According to the British Continuity Institute ’ s 2020 Supply Chain Resilience report , the number of UK organisations that experienced ten or more disruptions in 2020 was 27.8 per cent , compared to 4.8 per cent in 2019 . Of the companies surveyed 84 per cent said crossborder land transportation was the cause of logistics disruption .
A 2019 McKinsey report on managing supply chain risk noted that at the root of most supply chain crises is a common theme : a lack of robust processes to identify and successfully manage risk , both unknown and known . ( An example of known risk is a supplier going bankrupt , because the chance of it happening can be gauged from financial records . Similarly , the risk of cyberattack is known , as it ’ s measurable through IT analysis .)
McKinsey says managing unknown risk is best achieved by building a “ risk-aware culture .” In real terms , this means a business has “ defensive layers ” against unknown risks , and can respond quickly when such risks surface and threaten operations .
Mckinsey believes a risk-aware culture is attainable through :
• Transparency on risk tolerance . Risk mitigation often comes at a cost , so it ’ s important that every level of a business knows which risks need to be mitigated .
• Empowerment : Management and employees need to feel empowered to pass on bad news and lessons from mistakes . Finger-pointing is a no-no . Staff also need to be empowered to create an “ ownership environment ,” so that external threats are recognised quickly , and action timely .
Former Governor of the Bank of England , Mervyn King - now Baron King of Lothbury - has some telling advice for businesses on the
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