Describe a basic risk management process in SCM.

• A. Identify risks, assess probability and impact, develop mitigation strategies, monitor and respond, and implement contingency plans.
• B. Ignore risks and focus on cost reductions.
• C. Only document risks without mitigation.
• D. Launch contingency plans without identifying risks.

Answer: (A)

Risk management in supply chain is a structured, ongoing cycle that starts with identifying potential risks across suppliers, logistics, demand, and operations, and continues through assessing how likely they are and how severe their impact would be. Then you develop strategies to reduce or transfer those risks, assign owners, and set triggers. Regular monitoring and response ensure early detection and timely actions, and implementing contingency plans keeps operations moving if events occur. Together, these steps form a preventive, action-oriented approach to protect supply continuity and performance.

This option is the best because it includes all essential stages—identification, assessment, mitigation, monitoring, and contingency execution—covering the full lifecycle of risk management in SCM. Ignoring risks undermines resilience; only documenting risks omits the necessary mitigation and action; launching contingency plans without identifying risks leads to uncoordinated, wasteful responses.