The Weather of the Value Chain
Published on Friday, December 19, 2025
A storm struck a region where the company owned no direct assets. Yet operational costs surged, and several deliveries were delayed.
Analysis revealed that three tier-3 suppliers, previously invisible in standard reporting, were located in the affected area. The company had mapped direct suppliers but overlooked indirect dependencies. This disruption demonstrated that the real value chain often extends beyond the contractual supply chain.
The executive committee adopted a proactive approach: extending supplier mapping to tier-3 and tier-4 levels, integrating this mapping into the ERM register, and simulating stress scenarios to anticipate risks from geographic or climate events. Resilience indicators are now monitored alongside financial and operational KPIs.
For the board, the incident highlights the strategic importance of visibility across the full value chain. Operational resilience can no longer be limited to direct suppliers. Companies must integrate continuity and diversification measures across all critical levels of the chain to minimize the impact of indirect disruptions on overall performance.
In summary, modern risk management goes beyond contractual boundaries and requires a holistic view of the supplier ecosystem to ensure operational continuity.
Depending on its business sector and the nature of its activities, your organization may be impacted, directly or indirectly, by this global risk over the coming years.
Whether you are a director, an executive or a manager, you may be wondering if your company is exposed to this global risk or other potential events. And if so, are you and your organization ready to face these challenges?
Should you need advice on the appropriate risk governance and enterprise risk management approach for your organization, please contact us.
Baldwin Global is an independent advisory group offering professional services, education and training in risk governance and enterprise risk management. We help our clients’ boards of directors and management teams attain their objectives by embedding sound risk oversight and management practices into their decision-making process to have a significant positive impact on their business.
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