Magazine 07: Foresighted Risk Management

Reacting before the traffic light turns red

Spotting potential supplier insolvency at an early stage can save companies a large amount of moneyand stress. Companies can manage the risk if they start early enough and take proactive measures, as demonstrated by an example from a mechanical engineering company.

suppliers slipping into insolvency have long been only a theoretical risk for many companies. Transparency about these suppliers and early warning systems that ring the alarm when the first problems arise were – and still are – far too rare. The coronavirus pandemic has taught many companies that this risk is very real – and that it may cause huge revenue losses and competitive disadvantages in the months ahead.

Over the last year, concerns about future bottlenecks, production outages and the resulting sales losses have also prompted our client – a major German mechanical engineering company – to initiate a risk prevention project. Typically for many medium-sized companies, risk management has long been just one of many issues.

Project case in the current customer magazine:

You can read the entire case in our latest magazine issue. Our expert Jaymin Patel reports on the different perspectives that are necessary to obtain a comprehensive risk assessment of suppliers. He also reports in detail on the four steps of the project:

• Step 1: Collecting and Inputting Data
• Step 2: Recognizing the Risk of Insolvency
• Step 3: Spotting the Warning Signs Earlier
• Step 4: Introducing Continuous Monitoring