The Risk Institute’s Business Simulation Competition for Students

 

I had the pleasure of participating in the recent RMA TLA Case simulation at Fisher College of Business. I was interested in competing in this event because I recently learned about the Risk Management Association (RMA) and heard positive things about the case competitions. The case simulation was for a DHL run Toys R Us distribution center. We were given a disaster scenario and our mission was to come up with a disaster recovery plan.

In preparation for the competition, we went on a distribution center tour with DHL. It was a great experience and the employees at DHL were passionate about helping the students learn. I had never been to a distribution center before and it was as if my operations management class came to life. Things that I had learned in class became something tangible versus words in a textbook.

The competition was challenging because l did not have any previous business logistics knowledge. As an Actuarial Science student, most of the logistics and operations items are not things I do on a daily basis. It was interesting to put on another hat and think in a different way. My group consisted of majors: logistics, accounting, industrial engineering, and actuarial science. Having a diverse group benefited us because we all brought a different perspective on each area of the competition and were able to come up with valid solutions.  We were able to ask the DHL professionals questions about their daily experiences and how things operate. We learned a lot of things that we could not learn in a classroom. Hands-on experience is often hard to get, but some of the most important information about operation comes from the people that live it every day.

Going into the presentation portion of the case competition, my group did not feel particularly confident about our recovery plan. However, after discussing everything for most of the day, our solution seemed simple to us.  Our main priority was to protect the workers and get the orders done in an efficient and timely manner. We established this first and used it to guide all of our choices, making the case easier.

I have always wanted to go into mitigating risk for an insurance company. After completing the case and attending other RMA events I have learned so much about multiple areas of risk. Risk is everywhere and it is an opportunity for advancement. If you can mitigate risk properly that can make all the difference, not only with money but also with the safety and health of workers and consumers. I also learned that risk is not always quantifiable. People cannot always be explained by numbers and in my opinion, it is one of the biggest factors of risk. My group focused heavily on this in our recovery plan, and I think it helped guide a lot of our choices. Overall, the case competition was a great academic experience.

I would like to thank DHL and Toys R Us for giving us an opportunity to participate in this competition, and for taking the time to come to Ohio State and share their knowledge.  The hands-on experience provided was worth more than any textbook.

 

Unprecedented volatility adds new urgency and complexity to old risks, reports Aon’s 2017 Global Risk Management Survey

Aon, a founding member of The Risk Institute, released their 2017 Global Risk Management Survey today. Conducted in the fourth quarter of 2016, the bi-annual survey gathered input from 1,843 respondents at public and private companies around the world. It finds that trends in economics, demographics and geopolitics, as well as technology advancements, are transforming traditional risks and adding new urgency and complexity to old challenges.

Top discussion points of the survey include:

  • damage to reputation/brand as a top concern
  • political risk/uncertainties entering the top 10 risk list
  • Cyber Crime ranking the number one risk to North American businesses
  • disruptive technologies/innovation predicted to rise in risk
  • risk preparedness at its lowest level since 2007

Damage to reputation/brand is consistently the top-ranked risk by businesses. Companies have become vulnerable due to the amplified negative impact social media has on cases of defective products, fraudulent business practices, and corruption.

Cyber Crime is now the top concern among businesses in North America, jumping from number nine to number five on the top risk list. Cyber breaches are increasing and incident response plans have become more complex, making Cyber Crime a costly business interruption.

Political risk/uncertainties have recently re-entered the top 10 risk list at number nine. The survey finds that developed nations that were traditionally associated with political stability are becoming new sources of volatility and uncertainty. Additionally, according to Aon’s latest 2017 Risk Maps, trade protectionism is on the rise while terrorism and political violence ratings are the highest they have been since 2013.

“We are living in a challenging new reality for companies of all sizes around the world. There are many emerging influences that are creating opportunity, but at the same time, creating risks that need to be managed,” said Rory Moloney, chief executive officer for Aon Global Risk Consulting. “As the risk landscape for commerce evolves, businesses can no longer rely solely on traditional risk mitigation or risk transfer tactics. They must take a cross-functional approach to risk management and explore different ways to cope with these new complexities.”

Disruptive technologies/innovation is a concerning risk emerging for the future. It is currently ranked number twenty but is expected to jump to the top ten within a few years. New technologies such as drones, driverless cars, and advanced robotics have caused an increased awareness of impacts for businesses.

The top 10 risks are:

  1. Damage to reputation/brand
  2. Economic slowdown/slow recovery
  3. Increasing competition
  4. Regulatory/legislative changes
  5. Cyber crime/hacking/viruses/malicious codes
  6. Failure to innovate/meet customer needs
  7. Failure to attract or retain top talent
  8. Business interruption
  9. Political risk/uncertainties
  10. Third party liability (including E&O)

The full report can be accessed at www.aon.com/2017GlobalRisk.

 

Post Executive Education Series, “Identify, Plan, Protect: Using Cyber to Your Advantage”

On April 19,2017,  The Risk Institute at The Ohio State University, Fisher College of Business held an engaging conversation, as part of its Executive Education series, on the topic, “identify, Plan Protect: Using Cyber to your Advantage”.

As we see on an almost daily basis, Cyber Risk and Crime has become a part of our lives. During the first few weeks of 2017, we witnessed a large restaurant chain’s register payment systems impacted and a large business services firm’s marketing database with over 33 million corporate contacts shared across the web. Without much difficulty multiple other examples are found that cross any number of industries.

We were fortunate to have had Ohio Attorney General Mike DeWine introduce the topic to our audience of executives. AG DeWine is passionate about Cyber Crime and Cyber Risk and its impact upon the citizens of Ohio.

The session focused on raising the conversation of the obvious current situation with regard to Cyber Risk and Crime, but also considered risk mitigants that businesses can take.  The speed at which crisis communication and Public Relations plans are treated and managed are certainly at the forefront of dealing with Cyber challenges within business.  So much so, that the phrase “Fiasco Vortex” has been coined (see Glass Jaw by Eric Dezenhall). In the 21st Century, communication never sleeps. We live in a 24/7 news cycle that demands a much different treatment to Cyber Risk and Cyber business continuity planning.

An organizations business continuity plans will need to be tested to respond to geographic specific exposure that could have wider impact upon the business and it customers. Our speakers highlighted, from their diverse experiences and backgrounds, how companies can take a proactive approach to Cyber Risk and Crime.

Session leaders, Helen Patton, CISO, The Ohio State University; Jim Trainor, SVP, Aon Cyber Solutions and former FBI head of the FBI Cyber Division, Washington, DC; David White, CIO, Battelle Memorial Institute; David Lyon, Senior Manager, The Crumpton Group, LLC, collaborated to provide insight into:

  • Cyber a View from the CISO Trench
  • Cyber Threat Landscape 2017 and Beyond
  • Cyber Security’s Impact on IT Operations
  • The Role of Intelligence in Cyber Attacks: Offense vs. Defense

The session emphasized how to proactively use risk management to balance the risks related to Cyber Risk in order to meet business goals and enhance business performance.

The session did an excellent job of creating thought provoking ideas and advancing The Risk Institute’s unique role in uniting industry thought leaders, academics and highly respected practitioners. This is an ongoing dialog to advance the understanding and evolution of risk management in our world today. The Risk Institute’s conversation about risk management is open and collaborative with its relevance across all industries and its potential for competitiveness and growth.

Identify, Plan, Protect: Using Cyber to Your Advantage

On April 19,2017, The Risk Institute at The Ohio State University, Fisher School of Business will be presenting as part of its 2017 Executive Education series, the topic “identify, Plan Protect: Using Cyber to your Advantage”.

As we see, almost on a daily basis, Cyber Risk and Crime have become part of our lives. During the first few weeks of 2017, we have seen a large restaurant chain’s register payment systems impacted and a large business services firm’s marketing database with over 33 million corporate contacts shared across the web. Without difficulty, multiple other examples are found that cross any number of industries.

We are fortunate to have Ohio Attorney General Mike DeWine introduce the topic to our audience. AG DeWine is passionate about Cyber Crime and Cyber Risk and its impact on the citizens of Ohio.

The session will look to raise conversation on the obvious current situation with regard to Cyber Risk and Crime, and will consider risk mitigants that businesses can take. The speed at which crisis communication and Public Relations plans are treated and managed are certainly at the forefront of dealing with Cyber challenges within business. So much so, that the phrase “Fiasco Vortex” has been coined (see Glass Jaw by Eric Dezenhall). In the 21st Century, communication never sleeps. We live in a 24/7 news cycle that demands a much different treatment to Cyber Risk and Cyber business continuity planning.

An organization’s business continuity plans will need to be tested to respond to geographic specific exposure that could have a wider impact upon the business and it customers. Our speakers will highlight, from their diverse experience and background, how companies can take a proactive approach.

Session leaders, Helen Patton CISO, The Ohio State University; Jim Trainor SVP Aon Cyber Solutions and former FBI head of the FBI Cyber Division, Washington, DC; David White CIO Battelle Memorial Institute; and David Lyon, Senior Manager Crumpton Group, LLC will collaborate to provide insight into:

  • Cyber a View from the CISO Trench
  • Cyber Threat Landscape 2017 and Beyond
  • Cyber Security’s Impact on IT Operations
  • The Role of Intelligence in Cyber Attacks: Offense vs. Defense

The session will emphasize how to proactively use risk management to balance the risks related to Cyber Risk in order to meet business goals and enhance business performance.

The session will provide thought provoking ideas advancing The Risk Institute’s unique role in uniting industry thought leaders, academics and highly respected practitioners in an ongoing dialog to advance the understanding and evolution of risk management. The Risk Institute’s conversation about risk management is open and collaborative with its relevance across all industries and its potential for competitiveness and growth.

The Art of Balancing Your Eggs Between Baskets

Strategizing your portfolio of real options for the win.

What factors make your real options portfolio valuable? How do you analyze the nature of the interactions among real options and their effects on portfolio value? Ultimately, how can your firm be most strategic in managing this in your industry’s unique market?

To begin, firms must consider growth and switching options in developing a portfolio of strategic options. Growth and switching options represent the trade-off between flexibility and commitment, according to the study, “Managing a Portfolio of Real Options” co-authored by Ohio State researcher Jaideep Anand and with researchers Raffaele Oriani in Italy and Roberto S. Vassolo in Argentina.   While growth options relate to early commitment in growth opportunities, switching options give firms essential forms of flexibility to handle different sources of uncertainty. Too much commitment could create vulnerability; too little could hinder competitive advantages.

So how do you determine the right balance for your unique market? Let’s consider the sources of uncertainty within growth opportunities and switching opportunities. Some sources generate growth opportunities while others might induce switching opportunities, according to the study. For example, when market demand is the main source of uncertainty, growth opportunities may dominate the strategic decision. These elements are applied to different strategic situations of technological and market uncertainty. Managers must consider what is unique about their portfolio and how they can incorporate that when assessing its value. They must first understand how market and technological uncertainty can have different effects on the value of switching and growth options.

When the market has inconsistencies between demand and the need for new products, it affects the market size and ultimately, sales. In this case, growth options could limit firms’ losses to their initial investments. However, potential gains from future growth opportunities are unlimited.

When the market has technological uncertainty, firms must choose the “right” technology. Here firms can apply switching options that allow them to hedge against the risk of being locked out of the market because they have not invested in the right technology.

Based on your industry’s unique market and focusing on the opportunities available, these are important considerations to keep in mind in a world of quickly advancing technologies and ever shifting markets. To dig deeper into this topic, view the original research and its translation here.

 

Spencer Foundation Grant Enables RMA Students to host Ed Katersky

Managing trade risk in uncertain times

The threat of a trade war is greater than any point in the last 50 years.  Multinational firms must deal with the strategic risks of moving forward in a climate characterized by uncertainty with respect to foreign trade and investment.  In times of uncertainty, supply chain flexibility is an excellent strategy for risk mitigation.

Supply chain flexibility starts with postponing non-necessary capital expenditures and reducing unnecessary expenses such as travel or technology upgrades in the short term, with the idea of investing that cash once the path forward is more clear.  In an extreme situation, the extra cash may even be needed to support critical suppliers who otherwise might find themselves in distress as a result of the trade war.  If critical suppliers’ operations are impacted, the risk to your business may be more significant than just increased materials costs, especially if supplier stock-outs shut down your operations.

Other approaches to increase supply chain flexibility involve supply chain network design and strategic sourcing.  If you currently manufacture in Asia, or subcontract with suppliers who do, the recent withdraw of the U.S. from the Trans-Pacific Partnership (TPP) means that at the very least, you are not likely to see the decreased materials costs you were hoping would result from the TPP.  In a worst-case scenario, firms may face a 35% import tariff on products entering the U.S. from Asia.

Developing, or expanding your pool of domestic backup suppliers is critical.  While the costs may be higher than what you had planned, moderate price increases associated with moving to a U.S. based backup supplier may be better for your business than being subject to a 35% tariff or the potential supply chain delays that could result from economic turbulence associated with a trade war.

Consider moving some of your foreign operations back early.  This could lead to a positive public relations opportunity while mitigating the risk of disruption.  Subcontracted domestic manufacturing is another option for risk mitigation.  While domestic prices may not be as attractive as imports, domestic subcontractors are less likely to be impacted by trade turbulence and you may be able to negotiate their ownership of some of your productive assets and inventory, further freeing up capital.  This strategy preserves precious cash reserves for alternate uses later.

Nearshoring is also worth considering.  With the future of NAFTA in question and the Peso at affordable prices, there may be opportunities in partnering with a subcontractor just across the southern border.  This strategy is higher risk than subcontracting with domestic suppliers, but it may offer higher rewards.  If NAFTA is modified to include the rumored 20% tariff on imports or a border adjustment tax, the cheaper Peso makes investments into Mexico very affordable in the short run relative to Asian imports.  However, there is a risk that foreign direct investment into Mexico may bear losses as the U.S. leaving NAFTA completely would reduce demand for productive Mexican assets.  Mexico is an interesting high-risk proposition that should only be considered by companies with large Asian exposures, significant cash holdings, low degrees of operating leverage or that are in industries where the markets are not dominated by U.S. demand so they can take advantage of export opportunities if necessary.

Exploring an increased role for automation in your domestic operations is also recommended.  Automation is a great strategy for reducing the impact of a potential labor shortage in the U.S., or subsequent wage inflation for manufacturing workers.  If upgrading your automation is of interest, you may need to move quickly.  Once announcements of changes to U.S. trade policy happen, your competitors may also undertake automation projects.  This may leave automation and robotics suppliers with significant backlogs and increase your project’s lead-time.

If your product has a long shelf life and is unlikely to become obsolete over the next year, consider advancing production.  Importing now, while tariffs remain low and building up domestic finished goods inventory protects the margins on those units in inventory.  This may require renting additional storage space or short-term borrowing to fund the increase in working capital.  Increasing finished goods inventory is not a long-term strategy, but the extra inventory can buffer any rough periods of transition as you recalibrate your supply chain to deal with any new trade policies that we may see in the short-term.

With so much uncertainty, now is the time to invest in your backup strategy.  The strategy may be a Mexican partnership, domestic subcontractor, or reintroducing some of your own operations back to the U.S., positioning you to react quickly to policy changes and take advantage of opportunities that are likely to follow in the near term while your competition is still reacting to the news.  These are the times where supply chain flexibility and responsiveness offer a strategic advantage for leaders with vision.


Professor Gregory Sabin is a senior lecturer at Boston College’s Questrom School of Business.  Prior to that, he was a lecturer at The Ohio State University and a Fellow of The Risk Institute.  Professor Sabin helped start Fisher’s student led Risk Management Association.

How Work Culture Impacts Brand Reputation

Work culture has been defined as “the interactions of all employees which in the aggregate creates a picture of how things get done and what matters inside the organization” (Gebler 2017). Culture, at a point, intersects with brand reputation in that it can be considered two sides of the same coin. Reputation comes from the external belief of your company behavior, while culture is how people inside your company behave and reaffirm those beliefs.

Earlier this month, we held a thought-provoking session that explored how work culture and impacts brand reputation, specifically exploring the conversation from the perspective of academics and business leaders.

Session presenters included:

  • David Gebler, of Indiggo, Washington, DC has over twenty years’ experience working with global organizations on how to reduce people based risks while improving productivity and corporate reputation. Named as one of America’s top Thought Leaders in Trustworthy Business Behavior.
  • Dennis Hirsch, Professor of Law and Director of the Program on Data and Governance at The Ohio State University. In 2010, he served as a Fulbright Senior Professor at the University of Amsterdam where he produced a leading study on Collaborative Dutch data protection regulation.
  • Bob Bowman, Director Risk Management, The Wendy’s Corporation. Bob has a diverse risk management background with Macy’s for many years and since 2014 with Wendy’s. Bob’s background and responsibility include enterprise risk, business continuity, data and privacy risk management.
  • Lowell (Chip) Howard, Jr., Honda North America, Inc. Chip is General Counsel- Manufacturing at Honda North America and has responsibility for HNA Law Division’s offices in Ohio, Alabama, Indiana and South Carolina.

At its core, culture and brand reputation have effective leaders and leadership as an underlying foundational element.  From that core, effective leaders develop engaged employees who develop loyal customers.

The impact of Big Data on culture and brand reputation begins with what Professor Hirsch refers to as the Three V’s: volume, velocity and variety.  The fourth attribute is correlation.  The use of big data can bring great benefit, but also significant risk to a brand. A now classic example is when Target figured out that a teen girl was pregnant before her father did.

The Target Example

Target assigns every customer a Guest ID number, tied to their credit card, name, or email address that becomes a bucket that stores a history of everything they’ve bought and any demographic information Target has collected from them or bought from other sources. (Forbes) Target then uses this data to create highly personalized marketing materials.

In the case with the pregnant teen, she received a mailer containing only advertisements for baby products. Her father saw the mailer and become enraged, as he thought that Target was encouraging her to become a teen mother. After some back and forth with his local Target’s management, where Target apologized for the error, the father returned to the store and informed management that his daughter was indeed expecting.

Target and many other companies continue to utilize big data in order to generate a customized consumer experience. But now, in order to mitigate the risk of revealing consumer secrets and just generally spooking people, Target incorporates those customized advertisements in with the regular circulars.

Big data certainly has massive benefits for companies and the consumer when applied thoughtfully and strategically, but can create headaches for brands when used too liberally.

Thinking Practically

Bob Bowman and Chip Howard engaged the audience in discussion about how their respective companies leverage positive company culture towards a positive brand image.

At Wendy’s, culture and values are everything, going all the way back to Dave Thomas, the company’s founder. Bowman expounded on some of the trials Wendy’s have been through over the years — from fingers in chili to viral Frosty videos — and how Wendy’s leveraged its brand equity and relied on culture to see them through varying crises.

Values inform culture at Honda too, in the form of the three joys — the joy of buying, the joy of selling, and the joy of creating — and respect for the individual. Howard explained to participants that every Honda employee are encouraged to “find their Honda joy” because Honda believes that when associates work towards their own happiness first, the company will grow as a result.

Takeaways

  • Brand reputation and company culture are two sides of the same coin.
  • Effective leaders develop engaged employees which ultimately lead to loyal customers. At the core is effective leadership.
  • In managing big data and big data analytics risk, we must be careful to consider the potential impacts of the data, the correlation of the data, how that data could profile and what predictions can be made using the data.
  • Significant benefit can exist from the big data analytics. Risks, however, are present to include privacy violation, legal and regulatory, as well as the consequential brand and values impact.
  • Wendy’s core belief is that their success is based on the relationship with the customer. The foundation is food, which relationship is enhanced or eroded by behavior and trust is earned when both are delivered in a predictable consistent manner.
  • The Honda philosophy is built on a foundation of respect for the individual. From that fundamental belief, they believe that;
    • Initiative — Associates should not be bound by preconceived ideas.
    • Equality — Recognize and respect individual differences in one another and treat each other fairly.
    • Trust — The associate relationship should be based on mutual trust.

The Risk Institute at The Ohio State University’s Fisher College of Business exists to bridge the gap between academia and corporate America. By combining the latest research with the real-world expertise of America’s most forward-thinking companies, the Risk Institute isn’t just reporting risk management’s current trends — it’s creating tomorrow’s best practices.

OSU research institute leads nationwide initiative to curb distracted driving

The Risk Institute at The Ohio State University Fisher College of Business is leading a nationwide initiative comprised of dozens of companies, government entities, and researchers seeking to combine leading-edge research with industry expertise in order to predict and curb distracted driving behaviors. The project officially kicked off on Wednesday, February 22 at a roundtable discussion at The Fisher College of Business. 

“Distracted driving is an epidemic across the country. Every day you hear ‘distracted driving is killing people,’ and it is, but nothing is being done to figure out how to stop it,” says Phil Renaud, Executive Director of the Risk Institute. “That’s why we started this initiative — to create actionable change.” 

The number of fatal traffic accidents rose 7.2 percent nationally in 2015 according to the National Highway Traffic and Safety Administration. It is the greatest year-over-year increase since 1966. Distracted driving was a factor in about 10 percent of auto deaths; the exact percentage is difficult to determine due to privacy rules and other factors.

“Nationwide Insurance has a long history of promoting safety for our members,” says Larry Thursby, Vice President of Personal Auto Product and Pricing at Nationwide Mutual Insurance Company.  “We recognize that distracted driving is an issue and we’re looking forward to working with a team of professionals from across the country to find solutions that protect families in every community.”

The consortium identified a three-tiered approach: research, legislation, and technology.

Michael LaRocco, president and CEO of State Auto Insurance Cos., says that collaboration is the reason partnerships between industry, research, and government are crucial to a project like this saying, “This isn’t a problem that will be solved by legislation, research or technology alone. That’s why we’re working directly with researchers to apply their research to everything from car design and manufacturing to insurance, and using new technology to our advantage.”

Practical research application is a crucial component of this initiative, particularly behavioral research. 

“Understanding what makes people do what they do is the first step to changing that behavior,” says Ellen Peters, Professor of Psychology at The Ohio State University. “At a dangerous curve in the UK, for example, they played with drivers’ peripheral vision.  As drivers approach the curve, they see trees planted next to the road at decreasing distances apart. This funnel of trees creates a visual illusion that tricks drivers into feeling as if they’re speeding. As a result, people slow down.”

Renaud highlighted the Risk Institute’s involvement in bringing this project and all the involved partners together saying, “We are uniquely positioned to facilitate valuable conversation between academics and practitioners. The Risk Institute is rooted in research, dedicated to education, and committed to collaboration. This initiative is the perfect amalgamation of those values, and we are so excited to get started.”

Industry partners involved with the project are Honda Inc., Aon Benfield, Nationwide, NiSource, Ford, Motorists Insurance, DHL, State Auto, Freer Logic, True North and others. Representing the legal and governmental branches are the Ohio Attorney General’s Office and the Ohio Department of Insurance. Ohio-based Root Insurance, Smart Drive, Greenroad, and eDriving Fleet make up the technology voices in the conversation. A dozen researchers and thought leaders from OSU representing behavioral science, engineering, automotive research, risk and others make up the research arm of the initiative.

Resilient By Design

In our interconnected, 21st century global economy, unexpected— black swan— events in one corner of the globe can have a ripple effect through global supply chains and impact customers like we have not seen in the history of global trade. In a January 24 session on supply chain resilience, we explored how companies who are prepared for such events can come out stronger and thrive, while others who may be less prepared or not at all, risk significant impact to revenue, brand and at the extreme, the very viability of the underlying business.

Session presenters included:

  • Joseph Fiksel, Executive Director of the Sustainable and Resilient Economy program at The Ohio State University and a faculty member in Integrated Systems Engineering. Dr. Fiksel is an international expert in sustainability and resilience with over 25 years experience in the space.
  • Keely Croxton, Associate Professor of Logistics at The Ohio State University. Dr. Croxton has a developed expertise in supply chain resilience, focused on helping companies balance their inherent vulnerabilities with their management capabilities in order to effectively mitigate disruptions in the supply chain.
  • Darrell Zavitz, Vice President (Retired) Shared Services/Supply Chain, The Dow Chemical Company. During his tenure with Dow, Darrell drove best practices into each of Dow’s businesses including Resilience, Six Sigma/Lean, and Network Design.

Between 1900 and 2010 global natural disasters have grown exponentially, arguably impacted by climate, global crowding and connectivity. With the frequency of black swan events accelerating, the traditional COSO Framework for Enterprise Risk Management (Objective Setting, Event Identification, Risk Assessment, Risk Response and Control Activities) is no longer a sufficient means to view the world.

Today, more than ever, risks cannot always be anticipated. The risks may be very hard to quantify and adaptation may be needed to remain competitive. Resilience strategies in turbulent times would suggest that a more comprehensive strategy to the abruptness of change and the magnitude of change is warranted.

Introducing SCRAM™

The SCRAM (Supply Chain Resilience Assessment & Management) Tool™ is based on more than a decade of research at The Ohio State University and was highlighted as an alternative framework allowing companies to focus on balancing vulnerabilities with capabilities. With this balance, a business will achieve balanced resilience and improved performance over time.

An ability to assess vulnerabilities and capabilities, look for gaps and build capabilities is at its basic level the key to building supply chain resilience. The more resilient a firm is, the less likely the firm will see swings in performance.

SCRAM™ in Action

The Dow Chemical Company began SCRAM implementation several years ago. Their focus on supply chain resilience and being agile drove a strategy shift. The project was in three phases:

  • Phase 1:   “Get Fit” | Manage the Cycle
  • Phase 2: “Change the Rules” | Dampen the Cycle
  • Phase 3: “Change the Game” | Break the Cycle.

The approach taken by Dow in its SCRAM implementation began with a rapid qualitative assessment. This included an electronic survey involving 30-40 business resources devoting an hour or so to the assessment. The SCRAM methodology was then used as a filter to prioritize and sequence business urgency (opportunity and commitment). Model those results and follow with and audit to value delivery.

Session Takeaways

  • Risk tolerance and resilience capabilities tend to change as companies grow.
  • Companies need to develop the right portfolio of capabilities to match the vulnerabilities they face.
  • Every disruption presents a learning opportunity.
  • A critical leadership requirement is to develop a culture of resilience in the organization.
  • To maximize return on investment, companies should design for inherent resilience.
  • Measuring and managing enterprise resilience is still an emerging field, ripe for collaboration between industry and academia.