BPI, Pink Slime and Velocity of Risk

At a gathering of SC executives yesterday I mentioned the Velocity of Risk concept and use the current BPI case as an example of why understanding this concept is important. Here we have a company making a perfectly legal product that in the space of a few weeks finds itself questioning it’s very survival, all because of a blog posting by a chef. In other words, BPI, the product’s maker, went from “normal” risk range to the equivalent of a VaR breakpoint in days. This is why I urge clients to move beyond the traditional probability x impact digrams so common in SCRM and to add the third dimension of speed. Understanding now just impact or probability but also how quickly one moves through risk accumulation is a critical concept for SCRM managers to understand and adopt.

Advertisements
Carlos Alvarenga

Founder and CEO at KatalystNet and Adjunct Professor in the Logistics, Business and Public Policy Department at the University of Maryland’s Robert E. Smith School of Business.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s