In supply chain decision-making, what does risk management assess?

Risk management in supply chain decision-making primarily assesses potential supply chain disruptions. This involves identifying, evaluating, and prioritizing risks that can affect the smooth functioning of the supply chain. Risks can stem from various sources such as natural disasters, geopolitical instability, supplier defaults, or fluctuations in demand. By understanding these risks, organizations can develop strategies to mitigate them, ensuring that the supply chain remains resilient and can continue to operate effectively even in the face of challenges.

The focus of risk management is to proactively address issues that may impede the supply chain's ability to deliver goods and services as expected, making it a critical aspect of supply chain management. By having robust risk management practices in place, organizations can minimize downtime, manage inventory effectively, and safeguard their resources, ultimately leading to sustained operational efficiency and reliability.