This is for exactly the reason that they are external and therefore may be perceived as
‘unmanageable’. The risks of unpredictable demand, unreliable supply and the effects of
external shocks in the business, social and climatic environment are all the areas that we use as
scapegoats for unexpected outcomes. The internal drivers of process, control and
mitigation/contingency are more tightly under the direction of the company itself and are
therefore less obvious as being sources of vulnerability.
Making vertical and diagonal connections between the external and internal dimensions areas
provides a conceptual breakthrough in understanding how risk is uniquely embedded in the
individual company’s supply chains. Firstly, the external and internal drivers are described and
then how they are connected to form the unique pattern for the company.
External Drivers
The following three sub-sections provide an introduction to the external risks for a company.
Demand risk
Demand risk relates to potential or actual disturbances to flow of product, information, and in this
instance cash, emanating from within the network, between the focal company and the market.
In particular, it relates to the processes, controls, asset and infrastructure dependencies of the
organisations downstream and adjacent to the focal company.