5.1 Introduction

In the intricate and interconnected realm of global supply chains, the balance between efficiency and vulnerability is delicate. The significance of proactive risk management becomes glaringly evident when we consider real-world incidents that ripple through global commerce, either mitigated by foresight or exacerbated by oversight.

Toyota’s experience in 2011, when a devastating earthquake and tsunami disrupted numerous businesses in Japan, stands as a testament to the value of anticipation and preparedness. Having previously faced supply chain disruptions, Toyota’s fortified risk management strategies enabled a faster recovery than many competitors. Conversely, the 2021 blockade of the Suez Canal by the colossal container ship, Ever Given, highlighted the inherent risks of over-reliance on singular critical points in a supply chain. This incident paralyzed a vital maritime artery for six days, impacting global trade and emphasizing the importance of comprehensive risk assessment and robust contingency plans.

While the aforementioned are massive examples of risk situations, it’s crucial to recognize that every business, regardless of its scale, faces a multitude of smaller, yet significant, risks. These seemingly minor risks, if overlooked, can frequently and negatively impact businesses. For instance, failure to properly package consumer goods can lead to damage during transport. Similarly, inadequate security measures in a warehouse can result in theft, and improperly prepared documents with missing data can cause product delays at customs. In some scenarios, these smaller risk events can inflict more damage than larger, more newsworthy incidents.

This chapter aims to address both the high-profile risks that make headlines and the everyday challenges that businesses grapple with. As we journey through this chapter, we will equip readers with strategies, tools, and best practices essential for navigating the vast spectrum of risks in global supply chains.