What is a key component of risk management?

Risk identification is a fundamental aspect of risk management because it involves recognizing potential risks that could adversely affect an organization, its resources, or its operations. In the context of supplier relationships, identifying risks allows an organization to prepare for, mitigate, and manage those risks effectively. It forms the foundation on which other risk management activities, such as risk assessment, risk prioritization, and the development of mitigation strategies, are built.

When risks are accurately identified, organizations can implement proactive measures to address these risks before they escalate into more significant issues. This process ensures that organizations maintain continuity, stability, and resilience in their supply chain operations. Therefore, understanding the various types of risks—whether they are financial, operational, legal, or external—enables businesses to make informed decisions and safeguard their interests.