Watch: DOC Develops New Supply Chain Risk-Assessment Tool

John Rogula, managing director and leader of the enterprise risk management offering of Baker Tilly, provides a sneak peek at a new supply chain risk-assessment tool from the U.S. Department of Commerce.

A first-of-its-kind model to diagnose and assess supply chain risk across the economy is in the works from Commerce Department. It uses a comprehensive set of indicators to identify specific risks with a potential impact on supply chains, as well as their probability of occurring. Rogula says the tool will equip organizations with additional intelligence that’s crucial to the development of effective mitigation strategies, and tell them where they should be focusing their efforts in order to ensure maximum resilience. 

Of course, the risks that should be taken most seriously differ by industry, and even by companies within industries. So it’s important that the tolerances within a “heatmap” be adjusted accordingly. “Commerce isn’t suggesting that one size fits all,” Rogula says. A particular risk might be elevated or minimized, depending on a given organization’s skill at managing it.

The tool is one of the first that Rogula has seen “where they’re trying to provide an additional lens for leadership teams to consider risks that are specific to supply chain.” One of the technological advances that makes it possible today is the rapid maturation of artificial intelligence, which can help companies to develop forecasts and mitigation strategies based on huge volumes of information.

Typical risks to consider include those related to strategy, operations, finance, technical, and legal and regulatory issues. In addition, companies are beginning to incorporate environmental, social and governance (ESG) considerations, which span all five of those categories.

Companies are also paying more attention to risks that are low in probability, but have a significant impact on supply chains when they occur, Rogula says.