What is the main purpose of supply chain risk management?

The main purpose of supply chain risk management is to identify, assess, and mitigate risks within the supply chain. This process is crucial because supply chains operate in a highly complex and dynamic environment where various risks can arise, including operational disruptions, supplier failures, natural disasters, and compliance issues. By focusing on the identification and assessment of potential risks, organizations are better prepared to develop strategies to mitigate those risks, thereby safeguarding their operations and ensuring continuity during adverse situations. This proactive approach not only protects the supply chain's integrity but also contributes to the overall resilience of the organization, ensuring that it can adapt and respond effectively to unexpected challenges.

Maximizing company profits is a goal of many business strategies but is not the primary focus of supply chain risk management. Eliminating all risks is unrealistic, as it is impossible to completely eliminate risks in any operational area. Similarly, while improving employee satisfaction is important for overall organizational health, it does not encompass the core objectives of supply chain risk management. The discipline is fundamentally about understanding and managing risks to protect the supply chain's effectiveness and efficiency.