What is risk management in the supply chain and its common strategies?

• A. Identifying, assessing, and mitigating risks; strategies include supplier diversification, safety stock, dual sourcing, and contingency planning.
• B. Inventory optimization only.
• C. Marketing risk management.
• D. Quality control in manufacturing.

Answer: (A)

Risk management in the supply chain involves identifying potential disruptions, assessing their likelihood and impact, and taking actions to reduce exposure or prepare for recovery. This approach covers both preventing problems and having a plan to respond when something goes wrong. Common strategies include diversifying suppliers to avoid dependence on a single source; holding safety stock to cushion against delays or variability; using dual sourcing to keep alternatives available if one supplier or region encounters trouble; and developing contingency plans with predefined steps to take when disruptions occur. Together, these elements address multiple angles of risk—prevention, redundancy, and rapid recovery.

Other topics like focusing only on inventory efficiency, marketing-related risk, or quality control sit in narrower domains and don’t capture the broader, proactive approach to managing uncertainty across the entire supply chain.