In the last decade, a number of organizations have been rocked by unforeseen supply-chain vulnerabilities and disruptions, leading to recalls costing hundreds of millions of dollars in industries ranging from pharmaceuticals and consumer goods to electronics and automotive. And multiple government organizations and private businesses have struggled with cybersecurity breaches, losing critical intellectual property due to failures in the supplier ecosystem.

At the heart of these crises is a common theme – the lack of robust processes to identify and successfully manage growing supply-chain risks as the world becomes more interconnected. New threats, such as cyber-ransom attacks, are emerging alongside more traditional and longeracknowledged supplier risks, such as supplier bankruptcy.

The challenge of supply-chain risk management has been exacerbated by globalization, where even sensitive products like defense systems use raw materials, circuit boards, and related components that may have originated in countries where the system manufacturer did not even know it had a supply chain. This increased complexity has brought with it more potential failure points and higher levels of risk.

Interested in reading more about a practical approach to supply-chain risk management, please download McKinsey’s full article here.