Financial executives at the some of the world?s biggest companies believe supply chain risks pose the top threat to companies? revenue. At the same time, close to half of those surveyed say risks associated with globalization and outsourcing are only a low priority or concern for their organizations, potentially leaving their supply chains vulnerable. That?s according to Harris Interactive and FM Global, who polled more than 600 financial executives, mostly at companies with $1 billion or more in annual revenue, in their study of business risk.

The results highlight that as UK companies continue to increase their outsourcing and widen their supply chains, executives recognise with this comes a greater risk. Outsourcing of business processes and information technology to lower-cost countries can strengthen competitiveness, but multinational companies are typically locating and relying on vital aspects of their operations in areas subject to a greater frequency of natural disasters, different safety standards, legal structures and less corporate control.

The study also finds for North american Companies that the most prevailing emerging risk cited by companies worldwide is “governmental or regulatory”?outpacing even ?competition,? which ranked second. Furthermore North America-based companies are roughly twice as likely as their overseas counterparts to cite “insufficient time,” “inadequate personnel” and “insufficient budgets” as the biggest obstacles to addressing top risks. On average, respondents indicate the majority of their risk management budgets are allocated to risk control (loss prevention) rather than risk transfer (buying insurance). Finally recent corporate governance reforms have increased companies’ focus on risk management either moderately to highly at 88 percent of North America-based companies surveyed, as well as at 78 percent of companies based overseas.

Source: FM Global

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