2-6 Risk models in supply chain
2-6-1 FM Global model
In this model, risk factors divide to four branches for reflecting different risks which may arising from
confusion in supply chain.
2-6-1-1 Environmental: This kind of risk especially concerns to economical, social, governmental and
climate factors. Recently, in spite of no lack in above mentioned items, some societies were faced to
earthquakes, terrorist attacks and tsunamis.
2-6-1-2 Market effects: Is your supplier's reflex in pressure terms?
If not, the disorders between products supply and your supply chain can have destruction effect on your
final line. And what kind of information your suppliers have from their suppliers about market reflex?
Their presentation can be your presentation.
2-6-1-3 Business activities: Financial and managerial stability of suppliers should be attended more than
internal processes and governmental organizations experiences for their representing risk.
For example:
2-6-1-3-1: In case of breaking of internal operations by suppliers, if the defect has not been removed on
time, there will be problem in organization very easily.
2-6-1-3-2: If there is no attention to changes in key personnel, management and business process with
organization suppliers, it will have a negative effect on organization.
2-6-1-4 Physical installation: Losing dimensions is as much important for organization suppliers as
organization personnel. The difference is that organization does not control suppliers’ facilities. Some
points likenatural risks, structural materials, automatic sprinkler keeper and popular attraction in losing
protection indicator are usually ignored. However, these may be the most important probable factors
relating to defeated scenario (FM Global factory, 2006).