Supply chain risk refers to potential disruptions that can impact the flow of goods, services, and information across a business's supply network. These risks stem from third-party suppliers, geopolitical events, environmental regulations, or operational inefficiencies—all of which can affect supply chain performance and business continuity.
As global supply chains grow more complex, disruptions have become more frequent. A Gartner survey 1,2 found that 89% of companies experienced a supplier-related risk event in the past five years, yet many lack mature awareness and mitigation plans. In response, 79% of large organizations are prioritizing resilience and risk management over the next two to three years.
Effective supply chain risk management requires cross-functional collaboration and data-driven insights to mitigate risks before they escalate. Businesses must move from reactive approaches to proactive risk management, ensuring they can adapt to evolving challenges.
Why supply chain risk management is critical
Disruptions can be costly. One in twenty companies has experienced supply chain disruptions exceeding $100 million 3, underscoring the importance of risk management in safeguarding financial stability and operational efficiency.
Key challenges companies face include:
• Lack of visibility: 55% of businesses lack insight into their upstream supply chain.
• Limited supplier transparency: Only 14% can track third-tier suppliers.
• Raw material shortages: 83% of companies faced material shortages last year.
• Inadequate risk planning: Only 37% engage in scenario planning.
• Gaps in digital adoption: 67% use digital dashboards for visibility, reducing disruptions.
To manage these risks 4 effectively, businesses need real-time supply chain insights, improved supplier collaboration, and compliance-driven risk monitoring.
How businesses can strengthen supply chain risk management
Leading organizations are prioritizing three core strategies to enhance supply chain resilience:
1. End-to-end visibility: Companies are investing in data-driven platforms to monitor supplier performance, ESG risks, and compliance gaps.
2. Proactive risk planning: Businesses are integrating scenario modelling and supplier engagement strategies to anticipate disruptions.
3. Technology-driven compliance: Digital tools help standardize risk assessments, track supplier performance, and improve decision-making.
With increasing regulatory demands and evolving risks, businesses need a scalable and configurable supply chain risk management solution to maintain a competitive edge.
Get in touch to find out how Factlines' supply chain sustainability software can help your business gain visibility, reduce supplier risk, and ensure compliance.
----------------------
Sources:
1. https://www.gartner.com/en/supply-chain/trends/supply-chain-risk-awareness
2. https://www.gartner.com/en/articles/how-supply-chain-leaders-can-prepare-for-the-next-big-disruption
3. https://www.mckinsey.com/capabilities/operations/our-insights/is-your-supply-chain-risk-blind-or-risk-resilient
4. https://www.mckinsey.com/capabilities/operations/our-insights/taking-the-pulse-of-shifting-supply-chains
