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24 February 2015

Financial risks in supply chain "run deep"

Content team

A business expert has stressed the importance of organisations assessing their supply chain for financial risk.

According to Jeffrey Burchill, senior vice-president of finance and chief financial officer at FM Global, the threats in this area "run deep" and can be highly damaging if not protected against.

Writing for cfo.com, he pointed to research from the Business Continuity Institute that revealed four in five of business continuity and supply chain professionals have seen their organisation affected by at least one incident of supply chain disruption over the past 12 months.

"The risks indeed run deep. For example, sometimes it’s not one’s immediate suppliers that disrupt a supply chain but the suppliers of those suppliers," Mr Burchill stated.

He suggested chief financial officers (CFOs) should take a closer interest in supply chain risk rather than simply delegating this duty.

The business expert highlighted a number of questions CFOs can ask to learn more about this area. These include looking into gaps in supply chain knowledge, assessing whether too much focus is being placed on cost reduction and researching which risks pose the greatest threat.

"These questions are answerable no matter how complex or far-flung one’s supply chain," Mr Burchill said.

He concluded by saying that while a lot of work may be involved, conducting a thorough supply chain assessment is more than worthwhile for CFOs. The businesses expert claimed this will help to protect companies from the chances of "a crippling disruption" occurring and means finance leaders will not be caught out by threats they could have foreseen.

His warnings are supported by the Allianz Risk Barometer for 2015, which highlighted business interruption and supply chain risk as the greatest threat facing organisations this year.

Content team, Bureau van Dijk

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