- May 14, 2014
- 10:44 am
- John Caltagirone
- no comments
How Far Does Risk Mitigation Go?
Coming across very interesting news that may potentially alter several aspects from a supply chain perspective, stirred up the topic of risk mitigation; anticipating the future and how that may play into the supply chain. The topic of discussion was on Canada’s disagreement on a possible cargo tax being imposed.
Anticipating the legal and political situations of all countries is a very important matter. The risk here is that such matters as taxes can change in minutes, as a result, having a significant affect on your budget; or create several other loop holes in a supply chain.
What happens if Canada decides to counter-attack with a similar cargo tax fee on the USA? Such an example, and many others are an indication of how far risk mitigation can go to efficiently manage your supply chain. It is another indication that operations management cannot be separate from the rest of the functions within a business as well as external factors outside of the business.
What is also interesting is that, not only do changes in the external environment affect the individual firm, but can affect a whole state, indirectly. For example, going back to the Canada-USA cargo issue, one of the suggestions being made, based on the article, “Canada Tells The US No to Cargo Tax”, is for the USA to use their Harbor Maintenance Trust Fund to support all ports. That is a $1.6 billion revenue that is used to support the federal government. Does the government have a plan B for funding if they lose the support from the $1.6 billion? How might that affect local and foreign businesses?
These are important questions to ask, even if none of these proposals will end up happening, it is best not to wait to have fallen into a problem before deciding to find a solution for it.
Below is the link to the article of topic: