Insights |Risk Management

19th February 2024

How to mitigate supply chain risk

Building resilience in a supply chain helps to mitigate risk and limit negative impacts when disruption occurs.

By guest author Chris Bristow of Real Business Rescue.

A degree of unpredictability will always be present in this challenging business area so it is important to identify the risks most likely to materialise and plan a strategy to deal with them.

External issues, such as adverse weather conditions and customs issues, can severely compromise the success of projects and transactions, and potentially damage a business’s reputation in the long term.

It is vital, then, that some control is regained so how can supply chain risk be mitigated?

Diversifying suppliers

Expanding their supplier base offers businesses flexibility if one supplier cannot fulfil or deliver an order. Operating with just one or two regular suppliers creates a challenging situation if a problem arises, introducing a greater risk of the supply chain breaking down.

A geographical spread of supplier locations mitigates the risk of localised issues affecting the entire supply chain. Identifying suitable ‘backup’ suppliers can also help to keep the supply chain moving.

Creating a supply chain risk management plan

Preparing for supply chain difficulties via a risk management plan is key to operating a robust but agile business that can continue to operate effectively despite supply chain challenges.

A plan might include building flexibility into production or service delivery processes, for example, or expanding the supplier base as mentioned. Considering current supply chain risks is important, but potential risks that could affect a business in the future also need to be identified.

Narrowing these down to the most likely to occur, and those that would have the biggest impact on the supply chain, helps businesses to better manage risk and act immediately if a particular scenario materialises.

Using technology to mitigate supply chain risk

Transparency and collaboration are key elements in building a resilient supply chain and both can be achieved using technology. Being able to view each part of a supply chain allows for decisive action to be taken after an adverse event and keeps the supply chain intact.

Technology also enables real-time collaboration between supply chain members. This reduces the likelihood of irresolvable problems being experienced, and crucially, limits the negative impact as all members work towards a common goal.

Reviewing the risks regularly

Supply chain risks can alter considerably over time. Political unrest in supplier locations or on the supply chain route, for example, as well as climate change and industrial strikes, may not currently appear on a business’s risk radar but they might become an issue unexpectedly.

By regularly reviewing likely supply chain risks the management plan can be amended and potential disruption avoided. The risk management document can also be reviewed when a business uses a new supplier or changes its transportation routes or methods.

Benefits of mitigating supply chain risk

By staying one step ahead of supply chain issues a business can smooth out transactions and projects and ultimately improve profitability. It is difficult to underestimate the potential damage to a business when supplies or finished goods do not reach their destination on time, or services cannot be delivered because of supply chain delays.

Mitigating supply chain risks, therefore, is a key element in operating a competitive business that develops a solid reputation for efficiency and reliability. A clear and dynamic risk management plan and the use of technology are the foundations for this.

About the author – Chris Bristow is a business debt expert at Real Business Rescue, company rescue, restructuring and liquidation specialists with a wealth of experience in supporting company directors in financial difficulty.

Contact ESA Risk today

Managing and mitigating your risks effectively is key if you want to safeguard your commercial assets, enhance your reputation and maintain commercial advantage.

The risks businesses face will continue to evolve. Whether they are related to compliance, finance, operations, the political landscape, regulations or security, it’s critical that you have a well-defined strategy in place and can respond quickly to events and incidents.

If you require advice on risk management strategy, contact Mike Wright, Risk Management and Investigations Consultant at, on +44 (0)843 515 8686 or via our contact form.

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