Supply Risk

Compliance & Risk

Definition

The risk that supply of a good or service is disrupted, constrained or made more costly.

Explanation

Supply risk stems from supplier failure, geographic concentration, disasters, geopolitics and demand shocks. Managing it — through dual sourcing, buffers, mapping and monitoring — protects continuity. It is a top-of-agenda concern after recent disruptions.

Example

Concentrating a key material in one region is a supply risk mitigated by qualifying a second source elsewhere.

Related terms

Supplier Risk — The exposure a buyer faces from a supplier's potential failure — financial, operational, compliance or reputational.
Business Continuity Planning (BCP) — Planning to keep critical operations running, or recover them quickly, when disruption strikes.
Dual Sourcing — Deliberately using two suppliers for the same item to reduce dependency and supply risk.
Supply Chain Mapping — Documenting the suppliers, sites and flows in a supply chain, including lower tiers, to reveal dependencies and risk.

Related concepts

Supplier Management — Onboarding, qualifying, evaluating and governing the suppliers a business relies on — turning a scattered vendor list into a managed supply base.

Frequently Asked Questions

What is Supply Risk?

The risk that supply of a good or service is disrupted, constrained or made more costly. Supply risk stems from supplier failure, geographic concentration, disasters, geopolitics and demand shocks. Managing it — through dual sourcing, buffers, mapping and monitoring — protects continuity. It is a top-of-agenda concern after recent disruptions.

Can you give an example of Supply Risk?

Concentrating a key material in one region is a supply risk mitigated by qualifying a second source elsewhere.

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