- Finance professionals see supply chain disruption as one of the top two sources of risk in their industries, according to a new report from Dun & Bradstreet.
- In a survey of 1,100 financial risk managers, most respondents believe their own efforts to manage, monitor and predict supplier viability pose a moderate to high risk to their business — disparate data, organizational silos and lack of data integration were named as barriers for roughly a third of organizations.
- New technology that enables a more data-driven approach to risk management is proposed by the report as the solution to increasingly uncertain supply chains. However, willingness is high and adoption is low.
Mitigating risk is not just a task that benefits supply chain managers. Verifiable mitigation tactics have ripple effects that protect an organization from the financial shocks that can result from the same forces shaking supply chains all over the world. Shifting trade deals, an uncertain geopolitical environment and increasingly volatile weather patterns are increasingly on the minds of finance managers just as much as supply chain stewards.
Dun & Bradstreet suggests some of the anxiety felt by financial risk analysts about supplier risk could ease if they had better tools for forecasting and monitoring risk.
"Because risk management is becoming less about programmatically addressing the past and more about dynamically interpreting the future, modern finance leaders must embrace the knowledge they don’t have, the data they haven’t analyzed yet, and the possibilities that may impact their businesses," said Eric Dowdell in the Dun & Bradstreet report he authored.
The most common tools currently being used to manage risk according to the survey are in-house analytics, credit reports and third-party data. But, 60% of the risk management data represented by the study respondents was completely siloed, meaning data flowing from every corner of a company is not able to be integrated and formed into a complete picture of risk.
Less than 20% of respondents reported their company is "advanced" in the sophistication of their teams’ use of modern risk management tools such as blockchain, artificial intelligence and machine learning. These new technologies can be used to analyze and make predictions based on disparate data sources and extremely large data sets, but are currently more likely to be applied to improve revenue and profit, rather than improving risk management — essentially leaving money on the table.
The author suggests financial managers can take steps toward integrating new technology holistically into their operations by creating a culture of innovation wherein concepts like automation and artificial intelligence are viewed as exciting and not nerve-wracking.