Identifying and Managing Risks in SCM

Supply Chain Management or SCM includes movement and storage from the point of origin, that is, from the raw material to the point of consumption and everything in between. The process is interconnected and involves planning, execution, controlling and monitoring. However, with such a vast and interlinked process the risk involved in SCM is also high. Irrespective of the size of the business, there are various risks involved in SCM. But, the good news is that risks can be addressed by a well-planned SCM strategy.

There are two primary kinds of risks in Supply Chain Management: External and Internal Risks

External Risks include:

  • Supply Risk
  • Demand Risk
  • Business Risk
  • Environmental Risk

Internal Risks include:

  • Manufacturing Risk
  • Planning and Controlling Risk
  • Process Risk
  • Cultural Risk




To address these risks, businesses have introduced a specialised area called ‘Supply Chain Risk Management (SCRM)’. For the uninitiated, SCRM is the ability of an organisation to understand and manage its environmental, economic and social risks in the supply chain. It has to be executed in a manner that it will reduce the supply chain vulnerability. For this, a holistic approach is required. This requires multiple aspects such as logistics, finance and risk management disciplines to work together in order to mitigate the overall risk.

Some possibilities of managing risks are:

  • Managing stock
  • Planning alternative sourcing arrangements
  • Business interruption/ Contingency insurance

A smooth running SCM has various benefits. It can help you lower operational expenses, while keeping a track of the manufacturing and execution process.

But, to ensure that SCM and SCRM are executed properly, one needs to employ a highly skilled individual to maintain the right flow. After all, to identify and manage risks, knowledge is key. And, you can acquire this specialised skill with Welingkar’s Distance Education Programme — Post-Graduation Diploma in Supply Chain Management. The course will develop your professional skills and guide you to increase profitability of an organisation by managing the supply chain efficiently.


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