Practical Approaches to Industry Risk Management

Here's my cheat sheet for a first-pass quantitative risk assessment. Use this as your “day-one” playbook when leadership says: “Just give us a first pass. How bad could this get?” 1. Frame the business decision - Write one sentence that links the decision to money or mission. Example: “Should we spend $X to prevent a ransomware-driven hospital shutdown?” 2. Break the decision into a risk statement - Identify the chain: Threat → Asset → Effect → Consequence. Capture each link in a short phrase. Example: “Cyber criminal group → business email → data locked → widespread outage” 3. Harvest outside evidence for frequency and magnitude - Where has this, or something close, already happened? Examples: Industry base rates, previous incidents and near misses from your incident response team, analogous incidents in other sectors 4. Fill the gaps with calibrated experts - Run a quick elicitation for frequency and magnitude (5th, 50th, and 95th percentiles). - Weight experts by calibration scores if you have them; use a simple average if you don’t. 5. Assemble priors and simulate - Feed frequencies and losses into a Monte Carlo simulation. Use Excel, Python, R, whatever’s handy. 6. Stress-test the story - Host a 30-minute premortem: “It’s a year from now. The worst happened. What did we miss?” - Adjust inputs or add/modify scenarios, then re-run the analysis. 7. Deliver the first-cut answer - Provide leadership with executive-ready extracts. Examples: Range: “10% chance annual losses exceed $50M.” Sensitivity drivers: Highlight the inputs that most affect tail loss Value of information: Which dataset would shrink uncertainty fastest. Done. You now have a defensible, numbers-based initial assessment. Good enough for a go/no-go decision and a clear roadmap for deeper analysis. This fits on a sticky note. #riskassessment #RiskManagement #cyberrisk

𝗦𝘂𝘀𝘁𝗮𝗶𝗻𝗮𝗯𝗶𝗹𝗶𝘁𝘆 𝗶𝘀 𝗮𝗻 𝗲𝘀𝘀𝗲𝗻𝘁𝗶𝗮𝗹 𝗹𝗲𝗻𝘀 𝗳𝗼𝗿 𝗺𝗮𝗻𝗮𝗴𝗶𝗻𝗴 𝗿𝗶𝘀𝗸𝘀 𝗶𝗻 𝘁𝗵𝗲 𝗺𝗮𝗻𝘂𝗳𝗮𝗰𝘁𝘂𝗿𝗶𝗻𝗴 𝗶𝗻𝗱𝘂𝘀𝘁𝗿𝘆 The risk landscape for manufacturers has never been more complex—supply chain disruptions, cyber threats, regulatory shifts, and talent shortages are no longer isolated challenges. They’re interconnected, systemic, and business-critical. In this context, sustainability is not just an environmental initiative—it’s a core driver of resilience and long-term value creation. Here’s how it directly aligns with enterprise risk management: 🛠️ Supply Chain Disruption & Operational Continuity Volatility—from climate events to geopolitical shifts—is redefining global supply chains. Manufacturers must embed E,S,G risk assessment, supplier diversification, and climate scenario analysis into continuity planning. 🛠️ Cybersecurity & Data Resilience As operations digitalize, exposure to cyber threats expands. Strong cybersecurity protocols—aligned with ESG governance and employee awareness—are foundational to digital trust and resilience. 🛠️ Commodity & Resource Risk Rising input costs and resource constraints directly impact margins. Circular business models, product life cycle assessments (LCAs), and strategic sourcing help manage volatility and protect long-term supply. 🛠️ Regulatory Compliance & Preparedness Environmental and safety regulations are tightening across jurisdictions. Forward-looking sustainability governance—through internal audits, regulatory horizon scanning, and transparent reporting—mitigates compliance risk and preserves value. 🛠️ Talent Strategy & Workforce Resilience Demographic shifts and evolving workforce expectations require a new approach to talent. Embedding purpose, inclusion, and sustainability into culture and leadership development is now a business imperative. 🛠️ Competitive & Market Risk Sustainability is shaping customer expectations and procurement decisions. Companies that align sustainability with innovation and customer-centricity are better positioned to capture emerging market opportunities. 🛠️ Innovation Risk & Strategic Agility Sustainability-led innovation reduces product risk, enhances design relevance, and aligns R&D with regulatory and societal expectations—essential in a landscape defined by constant change. To summarize, when fully integrated into enterprise strategy, sustainability becomes a risk management accelerator and a source of durable competitive advantage. For manufacturers, it’s time to reframe the conversation—from cost to value, from compliance to leadership.

Logistics integrates transportation, warehousing, inventory management, and distribution into a cohesive network that supports the continuous movement of goods. It’s a system built on interdependence, where each activity influences the performance of others. When disruption occurs, the effects rarely stay limited to a single point. Instead, challenges spread across connected operations, creating systemic risk as issues cascade throughout the chain. In even more complex environments, these disruptions can intersect across multiple networks, escalating into hyper risk with amplified impact. Managing these risks requires more than reacting after problems arise. It calls for risk management to be built into the logistics system from the start. A simple and practical way to approach this is by using the framework of Identify, Assess, Manage. By identifying potential risks across logistics activities, assessing their likelihood and impact, and planning responses ahead of time, businesses can reduce the likelihood of costly disruptions. ✅ Take time to map out the processes and where risks can occur within your logistics network, from inbound shipments to final delivery. Identifying potential weak points helps teams focus attention where it’s needed most. This is where process and systems thinking comes into play! ✅ Work with different departments to understand how risks are connected across activities. For example, a delay in transportation may affect warehouse schedules or inventory levels. Collaborating across functions ensures risks are evaluated in the full system, not just in silos. ✅ Design flexibility into the network by planning backup routes, using multiple transportation modes, or keeping contingency options ready in case the primary path is disrupted. ✅ Make risk management part of everyday logistics planning, not an afterthought. Incorporating risk discussions alongside cost, speed, and service goals helps teams make more balanced decisions up front. Focusing only on speed or cost often misses how tightly connected risks can be within logistics operations. But, proactively identifying and building risk awareness into logistics design generates a network that can keep moving even when challenges arise. You can’t avoid every risk. But you can be equipped to manage uncertainty while protecting performance and service. #supplychain #riskmanagement #processimprovement

When it comes to navigating unchartered waters, one Head of FP&A learned the value of identifying and quantifying the company’s risks and creating a mitigation plan to address each one. What it all boiled down to was operational risk, i.e., failure to achieve your goals due to challenges faced in regard to people, processes, events, systems — anything involved in day-to-day business activities. As a category, this stands in contrast to market, credit or liquidity risks. The challenge of managing #operationalrisk is identifying and quantifying events and outcomes that generally are discussed qualitatively.  Full article: https://lnkd.in/digX6k2t Excerpts below: ➡ BACKGROUND/CHALLENGE: The presenter of this case study was working as the Head of FP&A for the Middle East cluster in a global pharmaceutical company, handling more than 30 countries. It was 2020, and COVID-19 had turned the world upside down. “Everything had been impacted,” he said. “How we lived and interacted with each other, how we worked and communicated, how we moved around and traveled. Every aspect of our lives had been affected.” ➡ APPROACH: The Head of FP&A relied on his experience as a finance business partner and used the opportunity to upskill his team. The team developed a standardized checklist for the three main business divisions, targeting the four primary functions in each division that held the greatest potential for financial loss, defined as a negative impact on the company’s cash flow and P&L. Their approach looked like the images below. The data they gathered was then aggregated into a Business Input spreadsheet. The team assigned finance ownership to each category and its associated risks and the functions, countries, franchises and products that would be affected. They then asked a series of questions: -Is the risk impacting our budget? -Is the risk included in the business plan or budget? -Which quarter will it impact? -What is the probability that this risk will happen? “It is very important to quantify the risk,” said the Head of FP&A. “Everyone can say, yes, I have a risk, but how much, which months, which quarter? What is the probability of the risk?” ➡ OUTCOME: Working through this process helps the organization and management to have, on a weekly basis, full visibility of what is happening, the associated risks, and a clear mitigation plan. “It is a powerful tool and a powerful process,” said the Head of FP&A. Different scenarios are run based on the risk probability and a mitigation plan is agreed upon, as well as who owns each mitigation plan. “At the same time, we think like a team: how can we mitigate each risk item? All the functions work together to mitigate the risk,” he said. The company was able to meet its annual budget during the very difficult period of widespread lockdowns. Full article: https://lnkd.in/digX6k2t #finance #fpanda #operationalrisk #riskmanagement