Risk Management in the supply chain solutions and logistics planning global industry illustrates the increasing degree of interdependence in managing complex projects in the world. Concargo continue to map interdependencies among organisations and across risks whilst creating incentive systems that operate over several years to avoid the “next quarter” mentality. We have instilled a culture of risk-reduction measures by understanding and recognizing low-probability events, and have our Board run unconventional crises exercises so that we can proactively react effectively when surprises happen.
Modern business is by nature more complex and commercial arrangements between firms have created a web of supplier complexity unknown in a simpler age, but fundamental today. Such complexity must be properly recognised rather than oversimplified, so that true risks flowing from complex processes, corporate structures and supplier arrangements are properly understood and managed. Concargo employs a robust enterprise-wide risk management process that explicitly covers key suppliers in the supply chain and beyond. Our plans also include a comprehensive scenario planning for potential “meltdown” situations and is embedded throughout the organisation by applying proper attention to our communication, company culture and code of ethics.
Concargo’s complex risks management and policy must not be assessed on intuition, as when systems get complicated, we build detailed quantitative models, because whatever the inherent flaws of quantitative models may be, the flaws of unaided intuition are certainly greater. Incentives must be aligned, so that if a risk harms only one party in the supply chain, than that party alone can assess the risk. The Board acts as the regulator with full accountability in collaboration with senior management, who act with full responsibility in modelling risks especially when business and the public has something at stake. We embody the doctrine “that the ultimate risk is flawed risk management”.