Treasury & Risk: How does a company go about quantifying its supply chain risk?
Bosman: Start by identifying critical dependencies, locations, processes and delivery systems, where an interruption could severely reduce revenue generation and profitability. Then, determine the scenarios that could create the worst possible damage. Calculate the revenue or profit at risk, should there be unplanned downtime.

Finally, assess the organization's flexibility to respond. For example, is there an up-to-date business continuity plan that has been tested? It is also important that companies consider the wider context in which their supply chain operates. Many companies have rushed into markets, such as China, India or Eastern Europe, without fully considering the potential new risks. But such risks should be examined before commitment to a region.

Treasury & Risk: How much supply chain risk should be transferred?
Bosman: Many companies view insurance as a primary component of supply chain risk management, but in my view it more properly functions as a last line of defense. Loss prevention and control are more critical first steps because risk-transfer options are not available for every type of risk and the financial impact of many supply chain risks go beyond what insurance can provide in indemnification.

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