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Supply Chain Risk Management Needs to Be Stronger

Businesses need to improve their risk management strategies when it comes to e

Supply chain disruptions can be a serious detriment to business, and those with executive jobs need to strengthen their approach to risk management, according to a recent analysis from the Insurance Information Institute.

Businesses that are spread across a variety of international markets may be particularly vulnerable to disruptions in the supply chain, the III said. Though natural disasters have garnered most of the attention for supply risks - from the earthquakes in Japan hindering operations and supply at Toyota and Honda to Hurricane Isaac's disruption of shipping traffic entering and exiting the Mississippi River - there are a wide variety of possible causes for supply disruption. These can include industrial accidents and strikes, political upheaval and civil unrest, or basic cash flow problems and supplier solvency. According to the III, it can take as long as two years to recover from a supply chain disruption.

Speaking recently with Outsource Magazine, CFO Alliance President Nick Araco said vendor and customer supply chains are a major focus for risk management. One approach companies are using is to implement new technologies and data capture processes that allow CFOs and risk managers to more easily view their top- and bottom-line performance in real time, Araco said.