@Risk

What poses the greatest risk to global supply chains these days? Financial failure.

That’s according to 75% of respondents in a new survey conducted by Aon and State of Flux.

Interestingly, though, only 7% of those polled had actually experienced losses related to financial exposure of suppliers. By contrast, the top reported reasons for supply chain disruptions were physical incidents at own sites (14%) and incidents at suppliers (12%).

Other highlights from the 34-page “2009 Risk in 21st Century Supply Chains” survey include:

• 91% of respondents report that their supply chains have inherent risk (up from 78% in Aon’s 2008 survey).

• 19% of survey respondents cited pandemic risk as major concern.

• 42% said supply chain risk is a priority (up from 27% in the 2008 survey). As a result, accountability is shifting upward to the board and CEO level, and companies report that they are taking a more proactive approach to supplier risk management.

• Nearly half (49%) of those polled reported “some” or “significant” increases in supply chain scrutiny by customers.

• However, as the authors conclude, supplier risk management remains “relatively immature.” That’s an understatement. A mere 15% of survey respondents feel that have a complete understanding of their supply chains. 42% admitted that they have no key performance indicators in place to monitor supply chain risk.

“It’s time to let go of past certainties as the supply chain threat is very real,” urges  Alex Hindson, head of ERM at Aon in a press release. “This is illustrated by 15% more companies making risk management a priority for 2009 (42% in total), with accountability being raised up the organization to Board and CEO level. This implies organizations are investing to become more risk aware. Companies must start looking for early warning signs with creditors and debtors to help react effectively and in a timely manner to potential supply chain failures.”

The full report is available at http://img.en25.com/Web/AON/Aon_Risk_in_21stCen_SupplyChains_09.pdf