At last week’s SCLA conference in Phoenix a lot of the talk was about Delta Airlnes’s recent purchase of refinery capacity as a hedge against rising fuel costs. The consensus at the conference, in the general press, and among the commodity specialists I have polled informally, is that Delta’s move was a bad one —
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
Good summary of recent OpRisk North America on Risk.net. Sample quote:
Mark Levonian, senior deputy comptroller for economics at the Office of the Comptroller of the Currency (OCC) in Washington, DC, opened the conference with his keynote speech on the morning of March 21 (the previous day had been devoted to technical seminars). He cautioned operational risk managers against relying too much on risk models.
“Op risk models should be a key part of the risk management process, but we have to ask ourselves whether the models are wrong. The use of models is crucial to good risk management today, but sometimes even the best models don’t work the way they are supposed to. In fact, all models don’t work sometimes. The risk that the models won’t work – model risk – is an operational risk in itself, and is a risk that has to be actively managed,” said Levonian.
Good piece in CFO.com on CFO’s role in leading RM. Interesting that SCM is #2 item on the list.
Good and balanced piece on CFO.com about the outlook for China manufacturing costs, a serious strategic risk for many Western firms. Full article here: http://www3.cfo.com/article/2012/3/supply-chain_china-soaring-wages-supply-chain?currpage=1
David Rowe, writing in the March issue of Risk seems to think so. Full article here: http://www.risk.net/risk-magazine/opinion/2152993/hedges-created-equal
Interesting piece in FT/Alpaville today by Lisa Pollack citing BOA/ML analysis of increasing strength of U.S. manufacturing sector. FT link: http://ftalphaville.ft.com/blog/2012/04/04/947201/the-return-of-the-us-manufacturer/
There may be no more common external risk facing SC managers today than weather risk. Up and down the value chain, producers, processers and retailers are all impacted in one way or another by climate and climate volatility. Yet only a small number of firms make a serious and consistent effort to model weather risk
At a recent client meeting on SCRM I asked the senior SC executive how much contact he or his team had with the Chief Risk Officer of the firm. The answer was “not much” and then “it’s usually to provide input into an ERM update for the board.” Besides that reporting discussion, I asked, does