Map the supply chain risks and develop mitigation plans - INTERMEDIATE

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A structured approach to supply chain risk management is required to assess all the vulnerabilities of the existing supply chain to current and future climate conditions. The framework should include and assess risks related to the social and environmental impacts of the entire chain.

Parts of the supply chain that are not under direct control may be more difficult to assess, so the first step is to create transparency of operations before assessing the level of risk.

An initial tabletop assessment can be conducted with all supply chain actors to get started. Risk assessment is a recursive approach where low probability, low impact risks can be discarded and high probability, high impact risks can be assessed over time.  

As a minimum, the following risk components are required:

  • Risk analysis: Hazards identification, exposure level, risks associated with them
  • Risk assessment: Acceptable risk level, current response & control decision process
  • Risk mitigation plan: Plan to avoid the risks, reduce risks exposure, transfer the risk or accept them.

High probability/high severity risk mitigation plans need to be monitored frequently and used as input to the future state of the supply chain.

Typical risks to analyse as part of any sustainable procurement strategy are health and safety, working conditions, human rights, environmental practices and environmental risks, carbon footprint, ethics and compliance. geopolitics...

5.6 times

more of extreme heat events to occur in a 3-degrees-warmer world.
(IPCC Report)

810 Millions

people are threatened by long-term sea level rise under the 3 degrees C warmer world.
(IPCC)

ADDITIONAL RESOURCES

On environmental risks and specifically climate change risks,  

- Financial Institutions have also developed enhanced climate risk tools, which can monitor the dynamic landscape of risks with integrated platforms. Read the UNEP FI’s 2023 Climate Risk Landscape for further details. These enhanced monitoring tools can be used for larger corporations willing to get live tracking of their risks.

- The probability of future climate events can be difficult to assess.  ImpactLab can provide estimates on future local temperatures based on IPCC climate scenario. Similarly easyXDI brings automated risk identification based on the location of assets.

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