The recent earthquake in Japan and evolving nuclear plant disaster have forced firms to triage their supply chains, adopting an emergency-room approach to responding to the crisis. Recent articles in the The Wall Street Journal and The New York Times have discussed potential disruptions to supply chains of companies doing business with Japanese suppliers and manufacturers. This underscores the critical importance of supply-chain management—and linking it to enterprise risk management (ERM). Unfortunately, many companies do not systematically incorporate ERM principles, practices, and tools in their supply-chain management activities.

Chief executives and senior managers have long known the benefits of ERM principles and practices. ERM is axiomatic in understanding the business and market environment, and in determining how to identify opportunities and manage risk throughout the product development life cycle. Successful entrepreneurs and start-ups are adept at not only discovering opportunities for new products and services, but also are among the best at systematically identifying and managing risk throughout the product life cycle and the supply chain.

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