Supply chain risk management (SCRM) is a discipline of risk management

Risk management

Risk management is the identification, assessment, and prioritization of risks followed by coordinated and economical application of resources to minimize, monitor, and control the probability and/or impact of unfortunate events or to maximize the realization of opportunities...

 which attempts to identify potential disruptions to continued manufacturing production and thereby commercial financial exposure.

Supply chain exposures

SCRM attempts to reduce supply chain vulnerability via a coordinated holistic approach, involving all supply chain stakeholders, which identifies and analyses the risk of failure points within the supply chain. Mitigation plans to manage these risks can involve logistics, finance and risk management disciplines; the ultimate goal being to ensure supply chain continuity in the event of a scenario which otherwise have interrupted normal business and thereby profitability.

Sometimes, it's possible for supply chain logistics techniques such as supply chain optimization

Supply chain optimization

Supply chain optimization is the application of processes and tools to ensure the optimal operation of a manufacturing and distribution supply chain. This includes the optimal placement of inventory within the supply chain, minimizing operating costs...

to prejudice contingency planning which would otherwise reduce the overall risk level for that particular supply chain.

Contingency options

Some options to engineer an acceptable risk level include:

• Managing stock
• Considering alternative sourcing arrangements
• Business interruption / contingency insurance

External links

• World Economic Forum Supply Chain and Transport Risk Initiative
• Supply Chain Risk Management
• Jan Husdal's private webpage about supply chain risk research, including dozens of literature reviews
• SCRM Blog, Blog on research in supply chain risk management