Uncovering Risks in the Supply Chain
17 October 2023
97% of Australian businesses are very or somewhat confident in their ability to respond to risks in the supply chain, but the reality is that many are unprepared.
To investigate current awareness of the risks that threaten our supply chains, McGrathNicol has 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. A key takeaway is that, despite the events of recent years, business leaders are confident that they can manage future risks to their supply chains but are perhaps underestimating or do not fully comprehend the real nature of these threats. 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.
1. Overcoming challenges to identify and address supply chain risks.
Three quarters (75 percent) of business leaders say their organisation has faced challenges addressing supply chain risks, with respondents citing a lack of awareness and understanding of their supply chain, apathy, limited data, unstructured planning, and the assumption that others are responsible for managing these risks. Education is needed to help businesses better understand the risks in their own supply chain, and that of their suppliers.
2. Market underestimates chance of increased geopolitical risk in 2024.
Only 16 percent of business leaders believe that geopolitical risk will increase in severity in terms of the impact on their organisation over the next 12 months; a figure which McGrathNicol believes underestimates the potential impact of the rapidly shifting geopolitical environment, including risks associated with upcoming Taiwan and US elections.
3. Third party cyber risks are misunderstood, as many businesses think a global supply chain attack won’t impact them.
While 64 percent of Australian businesses rank cybersecurity as the second greatest challenge to their organisation (behind financial performance), businesses underestimate the likelihood or impact of an attack on their third-party suppliers to their business: just one in six (16 percent) predict that these risks will impact their organisation over the next 12 months, with only 27 percent including cyber risks within their supply chain management plans.