Every Business has vendors that it relies on. The US economy's power and capitalistic nature has always delivered a large market of choices for business owners. If a vendor could not deliver for a company, there were others that could. This is how business gets done.
Now enter the post pandemic and possible recession economy. Assurances that your vendors will supply what you need is in question. Financially many of your vendors are hurting. Supply chain disruptions are growing, and lack of workers are forcing major changes in how products and services are delivered. Also, COVID is still lingering.
Doing a complete risk assessment of your vendor relationships is now of paramount importance.
So how do you do a vendor risk assessment? I won't kid you, this is not an easy task.
You will need to work with your risk management professional to establish a robust risk management "look" at your vendors on the same scale you review your own business.
To help get you started, I have listed below a few vendor risk identification questions.
1) Are you dependent on only 1 vendor to supply one or two critical goods or services to your organization?
2) Is that vendor showing signs of financial stress?
3) Is that vendor's quality of service or timeliness of delivery, waning?, or deteriorating?
4) Are other peer businesses stopping business with a vendor you are still doing business with?
5) Is the vendor's goods and or services supplied to you, dependent on only 1 or 2 other vendors in their vendor chain?
6) If a vendor you are using goes out of business or cannot supply what you need, are you going to lose income or customers?
As you can see, some simple questions will start your assessment and take you on a path to better protection of your business. Sometimes these assessments can lead you down a "rabbit hole" of risk identification that will make you uneasy. I say, "so be it". It is better to know what risks you have and address them, than to keep your head in the sand when it comes to your vendors. The good news is, there are usually solutions to reduce the risk and make your business better protected.
Until next time be careful out there and know your risks.
G. Kevin Nemith , Hilb Group Delaware Xavier Bodnar , Hilb Group Delaware
Post by:
G. Kevin Nemith CIC. CRM President, Agency Leader for Hilb Group Delaware,
Xavier Bodnar Benefits Broker Hilb Group Delaware
knemith@hilbgroup.com
xbodnar@hilbgroup.com
Top 20 insurance brokers and risk managers in the USA.
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