Risk and hazard identification is made to mitigate and manage risks and hazards that threaten supply chain businesses. Risk identification aims to establish all possible risks and later assess and mitigate these risks (Kildow, 2011). Some of the documents relevant to the process of risk and hazard identification include schedules and milestones, financing plan, procurement plan, cost estimate and historical safety performance (Cameron et al., 2017). These sources of information on risks and hazards need to be reviewed regularly to include changes in them while carrying out risk identification.
One of the main approaches to risk identification is identifying the root causes of risks. This can be done by speculating undesirable events that might occur and identifying potential impacts on the business. Events such as fire, accidents, and theft can be included as root causes of risks and hazards. The second approach of identifying risks and hazards is figuring out all the critical functions that the business must perform or goals that must be achieved, then identifying all the modes of failure of the functions and goals (Cameron et al., 2017). The approach of identifying all the things that could go wrong and then working backwards to identify the cause is usually effective in risk and hazard identification.
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Risks and hazards in the supply chain are assumed to be unavoidable due to external factors. The different links in a supply chain depend on each other, and failure from one of them becomes a problem for the other links. All possible scenarios that could lead to disruption of the supply chain are included in risk and hazard identification (Kildow, 2011). Internal risks and hazards are easier to identify and mitigate since they are within the business’ control (Cameron et al., 2017). Financial instability and management problems are a risk that can face a business from within. Unstable consumer demand and poor forecasting is a possible demand-related risk. Employees pose a risk of falling ill, not possessing adequate skills and taking industrial action against the business. Logistics providers may disrupt the running of the business by not performing as per the agreement.
The basic elements of business impact analysis include executive sponsorship, BIA tools, BIA processes, understanding the organization, and BIA findings. Carrying out a business impact analysis requires the support of executives within the company. Executive sponsorship will give business impact experts an easy time when doing their work. Business impact analysis requires an understanding of the organization, including all the critical functions and processes (Contributor, 2020). The BIA expert will need to learn the processes involved in different departments of the organization. Organizational processes and functions are critical to the failure or continuity of a business. BIA tools help to carry out a successful analysis after completely understanding processes and functions (Kildow, 2011). They include organizational charts, questionnaires, interviews and BIA software and are used to analyze the potential impact of a risk or hazard.
BIA process is an element that involves listing processes and functions, designating them as either critical or non-critical, and identifying the personnel who are necessary for executing the functions. For critical processes, detailed information of how the function is done and who does it should be gathered (Contributor, 2020). The financial and operational impact of interruption is identified, and target recovered dates are established. BIA data is to be stored safely for future reference. The last element is BIA findings, which is the confirmation and presentation of findings. The business impact should be confirmed with relevant personnel to ensure it is accurate and realistic. The business continuity manager manages the business impact analysis.
References
Cameron, I., Mannan, S., Németh, E., Park, S., Pasman, H., Rogers, W., & Seligmann, B. (2017). Process hazard analysis, hazard identification and scenario definition: Are the conventional tools sufficient, or should and can we do much better?. Process Safety and Environmental Protection , 110 , 53-70.
Contributor, C. (2020, August 19). What Are the 5 Elements of a Business Impact Analysis? Small Business - Chron.Com. https://smallbusiness.chron.com/5-elements-business-impact-analysis-44844.html
Kildow, B. (2011) A Supply Chain Management Guide to Business Continuity, AMACOM. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/apus/detail.action?docID=647606
