Supply Chain Security Risk Assessment | Proactive Defense Layers

Supply chain risk management is crucial for organizations in the current global economy. With the increasing diversity of threats ranging from ramsomware attacks to managing traditional risks such as supplier bankruptcies, it is challenging to identify and mitigate supply chain risks effectively. Many organizations have struggled to progress significantly on this topic for a few reasons:

Supply-based transparency is hard. 

Hundreds or thousands of suppliers may contribute to a single product in modern multi-tier supply chains. Identifying the complete set of suppliers from the raw-material sources to a final assembled system can require a significant time investment.

The scope and scale of risks is intimidating. 

It is difficult to assess the probability and severity of many risks, such as unpredictable weather patterns or the likelihood of a supplier’s employees engaging in careless cybersecurity practices. This lack of clarity makes it challenging to address, measure, and mitigate these risks effectively. 

Proprietary data restrictions.

In complex products, tier 1 or 2 suppliers often consider their supply chains to be proprietary information. This restricts visibility and limits the purchaser or integrating manufacturer’s ability to gain a comprehensive understanding of the supply chain. 

Known Risks

However, known risks can be identified, measured, and managed over time. For instance, a supplier bankruptcy leading to a disruption in supply would be a known risk. Managing known risks involves a four-step process: 

  • Identifying and documenting risk
  • Building a supply chain risk management framework
  • Monitoring risks
  • Instituting governance and regular review

Organizations must assess all known risks, even though it requires a significant investment of time, as it is necessary to improve supply chain risk management. Proactive approaches minimize the impact of unknown risks by establishing strong defense layers with appropriate barriers for risk sources. By addressing these barriers during the risk mitigation process, organizations can enhance their ability to manage and mitigate supply chain risks effectively. 

Unknown Risks

Organizations can take a proactive approach to minimize the impact of unknown risks by establishing strong defense layers with appropriate barriers for risk sources. 

Typical layers of defense that organizations employ to defend against unknown risks in the supply chain can include: 

Robust Supplier Vetting and Selection:

  • Implement stringent criteria for supplier selection
  • Conduct through background checks
  • Assess risk management capabilities

Diversification of Suppliers: 

  • Reduce dependency on a single supplier
  • Source from multiple suppliers for critical components or raw materials

Supplier Performance Monitoring: 

  • Regularly monitor supplier performance
  • Establish key performance indicators (KPIs) to track factors like delivery reliability and product quality

Contingency and Business Continuity Planning: 

  • Develop contingency plans for disruptions
  • Identify backup suppliers and maintain safety stock

Supply Chain Visibility and Transparency: 

  • Employ technologies to enhance supply chain visibility
  • Identify bottlenecks, vulnerabilities, and potential risks

Collaborative Partnerships and Information Sharing: 

  • Establish strong partnerships with suppliers and industry peers
  • Exchange information on potential risks and best practices

Compliance and Regulatory Considerations: 

  • Stay updated on regulations and industry standards
  • Comply with laws as data protection and environmental regulations

Specific layers of defense may vary depending on the organization’s industry and risk appetite. RA PRO helps you identify the right set of security controls, whether it is a layered defense or a single point of control.  

About Us

The CT Strategies team of former CBP CTPAT Supply Chain Security Specialists (SCSS) and Directors help companies successfully navigate CBP’s CTPAT program. Using insights from over 80 years of combined CBP operational and policy knowledge, we leverage our first-hand CTPAT supply chain security experience and connections to current CBP leadership, so you can save time and money and get the most out of your CTPAT membership.

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