![]() Regulatory and legal risk: Is your business aware of government regulations in your suppliers’ countries of operation? Regulations can change frequently and may disrupt your business if you aren’t prepared when a supplier can’t deliver or costs increase because of new regulations.Examples of social conditions that could disrupt your business include a supplier’s use of child labor or the likelihood of foreign invasion in a supplier’s country of operation. Environmental and social risk: What environmental events and social conditions are relevant to your suppliers, and how could they impact your business? For instance, a manufacturer with operations in a region with frequent earthquakes may be a higher-risk supplier than a manufacturer that does not often experience earthquakes or other natural disasters.In many cases, these risks cannot be eliminated, but your business can reduce supplier risk by choosing suppliers who actively work to reduce their own operational risk. Operational risk: Do your suppliers keep their operating locations, technology systems, and data secure? Operational risk spans the wide variety of risks that occur because of everyday operations.Financial risk: What’s the risk of your supplier going out of business? When you think about financial risk, consider how a particular supplier’s solvency will impact your ability to fulfill your own obligations to customers.There are four primary dimensions of supplier risk to consider: financial, operational, environmental and social, and regulatory and legal. With SAP Ariba Supplier Management solutions, you can drive spend to preferred suppliers and reduce risk every step of the way, from supplier onboarding and. Without a strong, transparent network of suppliers, businesses are ill-prepared to withstand disruption. ![]() Supply risk can also occur when your business relies on too few suppliers or lacks sufficient insight into its supplier network. A supplier’s policies, financial well-being, and data security are all examples of potential supplier risks. ![]() Supply risk, or supplier risk, is any risk created by the processes and decisions of a supplier that could negatively impact your company.
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