Risk Management Strategies Supply Chains Rely On

Startups and seasoned enterprises can experience similar yet divergent challenges. The sourcing of materials has been under tremendous scrutiny, in part, due to the global nature of apparel supply chains and corresponding risks involving environmental practices, human trafficking, and more.  

While American companies cannot completely control the business practices of their strategic partners abroad, there are ways to mitigate and avert bad behaviors, simply by integrating actionable risk management. 

Beyond the Risks You Know 

Survey participants in the KPMG 2024 CEO Outlook report cited the business risks expected to impede workflows in 2025: geopolitical challenges, inflationary pressures, and supply chain disruptions—a perpetuation of recent years. 

However, these leadership concerns gaining traction are based on repercussions from proposed trade tariffs, modifications to environmental regulations, and a growing operational push toward AI integration, putting enterprise reliance on systems instead of human intelligence. 

Business risks can be found outside corporate walls as well, where consumer demands often dictate dicey decision-making. Customers want more product choices and to receive them faster, escalating instances of error, returns, and waste, at a cost. Software provider nShift said last year’s return rates cost retailers $642B.  

For warehousing, transport, and manufacturing sectors, aging workforces spur labor shortages while potential new hires seek business opportunities fueled by innovation, automation, and the next shiny object in the room. But until companies scale the abyss between what was to what will be, risks remain.  

Perhaps of greater consequence are the increasing cybersecurity threats, making supply chains more vulnerable, despite the cry for visibility and transparency. Each risk is disconcerting; and collectively, they amass perplexity. How can business leaders confidently move forward without better protections? 

Without Risk Management, History Repeats Itself

Ask a Chief Technology Officer what it takes to mitigate business risk and the phrase “the right software” is a likely response. But is it possible to know what platform is right for you? And why does it often take a costly intrusion to get company buy-in on risk mitigation investments?  

A Director of Risk Management would likely say it’s in discovering a balance in risk prevention versus risk response, including measuring upfront costs compared to the price to repair the damage done in the aftermath of a breach. It’s an agile yet fixed conversation, because there is no one-size-fits-all solution. 

Although the details may differ from start-ups to seasoned retailers, there is a risk management constant—the more data-driven we are, the more accountability fuels success. 

Collaboration is key to efficiency, and it’s a requirement to expect from your 3PL. When moving product across multiple nodes, risk increases. He says having the ability to pinpoint pallet proximity and condition rests on the processes and people involved.  

With data accessibility, retail customers and their customers gain peace of mind through visibility. And in the event of a disruption, traceability leads to quick-turn solutions, minimizing downtime and supporting brand reputation. 

Unaddressed Risk Undermines Value 

Greater visibility not only impacts retail business’ productivity; it heightens a brand’s social impact. Online media outlets generate conversations about new products, resale opportunities, and the customer experience. While company-fed social channels can help shape their culture and market reach, ultimately, it’s consumer sentiment that tells the story. 

Without risk mitigation in play, a company can be one security threat away from disaster. The power of social media is at an all-time high, making brand protection a survival mechanism. 

Risk prevention versus risk response, the formula will differ from company to company and change with growth and scale. Fine-tuning the approach entails knowing specific value at risk calculations, involving: 

• Operations 
• Supplier and financial performance
• Cybersecurity
• Regulatory and compliance integrity
• Brand reputation
• And more.

Cisco’s digital resilience company Splunk explored the uncertainties businesses will face in 2025, predicting AI, regulatory changes, and resilience as top points of consideration when reassessing risk mitigation strategies. 

One-Off Risk Management Is Not Enough

Inflationary pressures, salary demands, and keeping a competitive edge can cost more than many businesses anticipate, leaving little for risk management investments. Spend can be reallocated from one line item to facilitate another, jeopardizing growth.  

For retailers, putting off risk mitigation strategies can upend entire supply chains as strategic partners can touch broader markets impacted by tighter regulations, requiring stricter compliance or inciting higher penalties if ignored.  

For businesses with suppliers and customers in close proximity to their headquarters, the shorter distance can give a false sense of security. Since risks and intrusions can originate from anywhere across the globe, a one-time risk management assessment and solutions integration is not enough.  

Because business practices, laws, and technologies are always changing, companies need to conduct risk analysis often to ensure systems are providing the most benefit. It isn’t enough to monitor one’s own company, but also work with supplier, manufacturing, and 3PL relationships to ensure their risk mitigation practices are enforced and current.  

Tracking systems must be compatible, and when risk mitigation software releases updates, they must be adopted across supply chains to avoid unnecessary vulnerabilities.  

3PL Risk Mitigation Empowers More

With all the unknowns to come in 2025 and beyond, business growth and scalability could rest on your ability to protect what you already have.  

Expanding product offerings, for example, without protective risk mitigation processes in place is like building a foundational framework without a support beam—one strong gust of the unexpected and it’s gone. 

Retailers can refer to the following basics as a hedge against unnecessary risks from suppliers and third-party logistic 

• Embrace compliance 
• Own accountability 
• Demand safety 
• Ensure insurance 
• Accept nothing less 

By utilizing the above checklist, business operations gain a balance of visibility and protection to better gauge efficiency, production, throughput, and inventory amid supply and demand fluctuations, and reverse logistics. 

Knowing When to Say No

When you value who you are, what your brand represents, and how your product positively drives change, you want to align your business with partnerships that parallel your core characteristics.  And while an attractive price can be alluring, when it comes to risk management investments, scrutinize beyond the dollar. 

It’s also crucial to identify and remove non-profitable risks wherever possible. This discernment is one facet of WSI’s customer-centric approach, enabling safe and reliable logistics services. 

Time is On Your Side

Risk mitigation is actually a catalyst for progress and, once integrated, helps reduce customer complaints, claims, litigation, and losses.  

Proactive risk mitigation optimizes internal and external resources, while creating more time and energy for the areas of business you enjoy, such as research and product development, marketing, and technological innovation.  

A risk management strategy is more than a defensive measure–it’s a tool for achieving cost efficiency and sustainable growth. Businesses across all industries can use a comprehensive risk mitigation framework to unlock potential, safeguard their future, and thrive in an ever-changing landscape. 

Boost your risk mitigation strategy by partnering with WSI, a proactive 3PL provider.