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Supply Chain Risk Universally Declines in May, but Global Vulnerability Remains High

Inaugural report from riskmethods demonstrates a sharp increase in cyber security, financial and labor risks

riskmethods, a leader in supply chain risk management, has released the riskmethods 2020 Risk Report: The Year That Changed Everything, which details the top supply chain threats that affected organizations in 2019 and how they evolved during the first half of 2020 due to COVID-19. The inaugural report is the first in an ongoing annual series, aimed to identify trends in risk management from organizations with complex supply chains.

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“Despite the severity of the pandemic, procurement and supply chain professionals cannot afford to lose sight of other risk and warning signs in the market. With the evolving complexity of supply chain risk, organizations need strategic, proactive, data-driven approaches to supply chain risk management.”

The index reveals that as of this May, there’s been a decline in every type of supply chain risk monitored by riskmethods, signifying a potential turnaround as COVID-19-related lockdown and restrictions begin to lift. However, the percentage of pandemic-related threats in May was still higher than January or February 2020. Similarly, financial distress of suppliers was 105% higher in May than at the beginning of the crisis, signaling there’s more damage to come.

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Comparing this year to last, in January – May 2020, there was a 34% increase in the total number of early warnings of supply chain disruption, compared to the same period in 2019. Specifically, from January to May 2020, warning signs for:

  • Disasters at partner sites increased by 151%
  • Disasters at location increased by 100%
  • Instability in key employee positions increased by 46%

“At the beginning of the year, when we began compiling this report on risk, our risk intelligence told a very different story,” said Raimund Rix, Chief Product Officer at riskmethods. “But despite the upheaval and supply chain disruption companies face right now, we need to take the time to review and consider how the broader risk landscape changed, and how that affects our ability to recover and move forward. Organizations that continue to focus exclusively on pandemic risk open themselves up to additional vulnerability. Our goal is to equip organizations with the intelligence, resources and technology required to survive in the new normal.”

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