Third-Party Risk Assessment (TPRA) as a Service


Supply chain concentration risk is a critical concern across various sectors. When an organization relies heavily on a limited number of suppliers, geographic concentration, or specific routes, sub-suppliers, or technologies, it becomes vulnerable to disruptions. Here are four actionable strategies to mitigate supply chain concentration risks and enhance resilience:

1. **Diversify Suppliers**: Relying on a single supplier for critical components or services can be risky. Any disruption faced by that supplier can quickly impact the entire supply chain. For instance, Toyota experienced production line shutdowns due to a cyberattack against a primary OEM supplier. Diversifying suppliers helps spread risk and ensures continuity even if one supplier faces challenges.

2. **Geographic Diversification**: When a company’s supply chain heavily relies on suppliers in a specific geographic region, it becomes susceptible to natural disasters, political instability, or transportation disruptions. The 2022 Russian invasion of Ukraine affected organizations sourcing grain, semiconductor raw materials, and other resources from Ukraine. Diversifying geographically helps mitigate such risks.

3. **Contingency Planning**: Organizations should develop contingency plans for supply chain disruptions. Having alternative suppliers or backup plans in place ensures continuity during unexpected events. Real-time visibility into the supply chain is crucial for swift decision-making when disruptions occur.

4. **Risk Metrics and Monitoring**: Supplier risk should be measured and monitored as part of non-financial risk metrics. Aligning these metrics with the organization’s risk appetite statement helps manage concentration risks effectively.

By implementing these strategies, organizations can enhance their supply chain resilience and minimize the impact of concentration risks.