The ERM (Enterprise Risk Management) Forum in London on Tuesday released Ermic reports on supply chains and risk management.
Produced in collaboration with boutique specialist (re)insurance broker McGill and Partners, the supply chain guide answers the following 12 questions:
- When I ask internally about supply chain exposures for the organization, how do I gain confidence that there is a common understanding of the breadth of issues being raised among those responsible within the organization for addressing them?
- Are risks to the supply chain considered at a macro level based on external factors and the company’s own suppliers?
- How do I identify the components of the supply chain whose failure would have the most serious impact on the company’s ability to continue to provide its core products or services?
- How can I satisfy myself that appropriate contingency plans are in place in the event of a critical failure in the company’s supply chain?
- For key suppliers, how does a company determine how far along their supply chain is to assess the supply chain risks they face? Is it necessary to trace all the way back to relevant raw materials?
- To what extent does the company consider supply chain risk with its key suppliers? Or is it a purely introspective exercise?
- How is risk assessment of IT outages, cyber attacks and data breaches integrated into the company’s approach to the supply chain?
- How do I understand the extent to which the organization is legally responsible for the conduct of its suppliers and subcontractors in the jurisdictions in which it operates?
- To what extent do the company’s statements and commitments on ESG (Environment, Social and Governance) align with those of its key suppliers of goods and services?
- What are the organization’s responsibilities under the Modern Slavery Act in relation to its supply chains?
- What other insurances are relevant for supply chain risk?
- To what extent can business interruption insurance effectively mitigate supply chain risk?
Themed “Keeping Up with Speed,” the 19-page paper aims to provide a toolkit to help directors understand and keep pace with supply chain challenges. The insurance industry responds they.
Francis Kean, finance partner at McGill and Partners, said: “The challenge directors face in fulfilling their fiduciary duty to oversee a company’s affairs is particularly acute when it comes to key elements of the supply chain.
“This is due to an increasingly complex and unpredictable web of risks, including geopolitical, cyber-related and reputational. This guide gives directors an opportunity to rethink some basic but important questions.
Airmic chief executive Julia Graham, meanwhile, cited the “rapidly changing and volatile world we operate in,” amid which supply chains are being adapted and reshaped.
“Boards consider the risks associated with their supply chains and closely examine the cost benefits of current practices and the changes required to meet the mission and strategic objectives of the organizations they govern,” Graham said.
As for the Risk Management Guide distributed during the ERM Forum, the 16-page document goes deep into risk management, risk assessment, risk analysis, risk assessment, risk reporting & communication, and risk treatment.
The resource also includes sections on monitoring and reviewing the risk management process and the framework and governance of risk management.
“Risk management continues to be a rapidly evolving discipline, and there are many different concepts and interpretations of what risk management entails, how it should be conducted, and why,” Ermick wrote in the report.
“Some sort of guidelines and standards are needed to ensure that there is agreement on: the terminology used; the process by which risk management is carried out; the organizational structure for risk management; [and] Purpose of Risk Management.”
AirMic, the UK association, has over 450 institutional members 1,500 individuals Members.