In a previous article, we talked about the importance of identifying external risks that could interrupt your business operations. It is essential to focus on one specific type of risk that can have a major impact on your business: a potential service interruption from one of your suppliers. Indeed, every company is undoubtedly dependent on most of its suppliers. Let’s take two specific examples: with the gradual return to hybrid work in the office, what would you do if your company lost all its Internet connections for several days following a major incident at your supplier? Or your largest supplier of goods or services is unable to maintain its operations for several weeks. Are you prepared for these eventualities?
Unfortunately, it is difficult to control these situations when they occur, which is why it is important to plan for certain scenarios to mitigate the effects of this type of risk. Since the subject is very broad, we will limit ourselves to presenting a few scenarios to make you aware of the importance of implementing these measures within your organization.
Identify and categorize critical suppliers
The first step is to identify all your suppliers and determine which ones are the most critical to your business. Especially for large organizations, it would be impossible to contact each of them to verify if they have a business continuity plan (BCP) in case of a disruption. By identifying the most critical ones and categorizing them, you can simplify the process and verify with each of them what measures are in place.
In some cases, it is also possible to conclude an agreement with the supplier to determine a minimum to respect in terms of business continuity, for instance, the recovery period. An audit by a neutral third party, such as an external firm, is also a possible option to ensure that the supplier has an adequate business continuity plan.
Furthermore, the relative importance of each supplier is not necessarily related to the cost of the services/goods billed or the number of employees using the service in your organization. Rather, the focus should be on the impact that a disruption of their services will have on your operations. The greater the impact, the more critical the vendor. The questions to ask should be oriented towards the evaluation of the consequences: financial, legal, operational, security, reputation, etc.
It is therefore beneficial to be well prepared for any eventuality and to prepare a plan B if the services of a critical supplier are ever disrupted.
It is also a good idea to ask some of your most important partners to participate in a few of your business continuity tests and exercises, and vice versa, to validate actual capabilities and expected recovery times. This allows you to include all stakeholders in the process and ensure that all factors are considered.
Stay on top of the news
One thing is for sure, the pandemic has demonstrated that we live in an interconnected world. In the last two years, all companies were on equal footing with this situation and are still feeling the effects, such as shortages of raw materials and labor. Technological dependencies within organizations, especially in the context of teleworking, also increase the risks. Therefore, it is important to be aware of them and to put in place internal mechanisms to improve the security of your information.
On the other hand, there are more isolated situations that can have targeted consequences on only a few companies. Think of the war in Ukraine that is currently taking place and that has an impact on several levels. For example, a large company here could have its call center located in Europe and the situation in Ukraine could greatly disrupt the call center’s activities. Therefore, impacting the activities of the company located thousands of kilometers away and on another continent.. Furthermore, it is to your advantage to think about this, for example: I have a supplier based in Montreal (Quebec), but where are his suppliers located? You should not necessarily assume that they are all located here in Canada.
We present these scenarios to demonstrate that no organization is immune to the unexpected. It is consequently important to stay abreast of current events and to always ask yourself how such a situation could affect you in one way or another.
In summary, you should not overlook the impact that an interruption of services from one of your suppliers can have on your operations. Just like other external risks, you must be prepared for any eventuality to ensure a minimum recovery of your activities. Benoit Racette Services-conseils inc. can help you be better prepared and accompany you in this analysis. Contact us now: [email protected].