A new report from McGrathNicol has revealed that 97 percent of Australian businesses say they are very or somewhat confident in their ability to respond to risks in the supply chain, yet 75 percent of business leaders reveal their organisation has faced challenges addressing supply chain risks.
McGrathNicol suggests that leaders are perhaps underestimating or do not fully comprehend the real nature of supply chain threats, stating that companies and their boards must “interrogate the steps their organisation has taken to understand, and mitigate, the many elements of risk that make up a modern supply chain.”
The research discovered that challenges are attributed to a lack of awareness and understanding of the supply chain, apathy, limited data, unstructured planning, and the assumption that others are responsible for managing these risks.
McGrathNicol concludes that education is needed to help businesses better understand the risks in their own supply chain, and that of their suppliers.
To investigate current awareness of the risks that threaten supply chains, McGrathNicol partnered with YouGov to survey 300 Australian Directors and C-Suite leaders across multiple industries on the risks they are concerned about, their risk management processes, and the barriers they face in addressing supply chain threats.
Other key findings reveal that the market is underestimating the chance of increased geopolitical risk in 2024, with just 16 percent of business leaders believing that geopolitical risk will increase in severity, in terms of the impact on their organisation over the next 12 months.
McGrathNicol suggests that they are underestimating the potential impact of the rapidly shifting geopolitical environment, including risks associated with upcoming Taiwan and US elections.
Third party cyber risks also appear to create misunderstanding amongst respondents, with many businesses believing a global supply chain attack won’t impact them.
The research reveals that 64 percent of Australian businesses rank cybersecurity as the second greatest challenge to their organisation (behind financial performance), despite this only 16 percent predict that these risks will impact their organisation over the next 12 months.
In fact, 73 percent of organisations have not considered cyber risks in their latest risk management plans. Almost 3 out of 4 businesses haven’t considered geopolitical risks (74 percent), supply chain risks (74 percent), counterparty risks (73 percent), or legal/regulatory risks (80 percent) either.
Elsewhere, the report states that 27 percent of businesses have failed to update their risk management plans in the past two years, with 17 percent assuming that because their supply chain is small it doesn’t require risk management.
Rhyan Stephens, Partner at McGrathNicol Advisory says: “Supply chain risk management programs have failed to keep pace with the modern supply chain. While businesses fully understand financial risks, they need to better address the other operational risks that directly threaten and impact the company’s bottom line.”
This begs the question for supply chain managers: do you fully understand the risks to your supply chain and could you be doing more?
