3. Mitigation and Contingency – Mitigation risks occur when contingencies, or alternative solutions, are not put in place in case something goes wrong. Mitigation is a buffer against risk which is built into operations and, therefore by default, the lack of mitigating tactics creates a risk in itself. Contingency is where a plan exists and resources have been identified ready to be implemented in the event of a risk being found.
Mitigations which may be present within a supply chain management could include:
- Inventory;
- Capacity;
- Dual sourcing;
- Distribution and logistics alternatives; and
- Back up arrangements.
4. Cultural Risks – These risks are caused by the cultural tendency of a business to hide or delay negative information and are indicative of businesses which are slow to react when unexpected events occur.