Having worked for a few companies over the years I often stop to wonder to think do service providers really consider the clients risk when offering their services to them? Of course we all put systems in place to reduce risk and this is one of the key issues lately in the world of logistics with White Papers, Case Studies and experts all weighing in on the topic – enough to make your head spin and in some cases cause even more confusion than before the information was digested. Look, risk is everywhere – whether crossing the street or choosing which food to eat. Which service provider to use, how much to pay, will my goods get there on time, doing business in an austere and dangerous environment, have my sales and management team overcommitted on the project, do I have correct documents for clearance, does my logistics provider know what he is doing, do I have a vetting process for my vendors and service providers, do my supplier’s have quality product and in the end will my customer be happy and can I and shareholders/stakeholders live with the returns and outcome?
Risks are everywhere, the key being to simplify the process where you analyze risk and think the challenge through with common sense at the forefront of this process.
I’ll share an example of risk assessment looked at with a “profit target” in mind for a large multinational company I worked for where a manager took it upon himself to make a call and sale without assessing risk. The assessment (IMHO) was made strictly with profit in mind and not “customer service”. Our customer was involved as a supplier to a capital project whereby the project had an strategic relationship agreement (SRA) with another global provider for transportation. The SRA did not want to assist in the completion of actual commercial documentation for this project to Mongolia as they were not the owner of the goods and did not want to accept risk for incorrect documentation preparation and possible customs fines, penalties, seizures and possible irreparable trust/brand damage with the customer – the right call. The client asked us, a freight forwarder who WAS NOT USED for the project and who did not have an SRA with the project to assist in preparing documents. So what do we without know customs formalities in Mongolia or have a designated expert on staff to handle this type of request? We accept the challenge and prepare documents with the customer who is under the impression that the proper steps have been taken to insure clean compliance for export and importation to Mongolia. So what happens next you might be asking? Seizure, fines and penalties? – nothing that would have taught anyone involved a lesson in this matter and cause for future review of the situation in a different way — all entered Mongolia in the end with no issue, documents were prepared over a few weeks, our members and SRA logistics members had multiple issues working with each other but in the end profits were made and the customer was relatively happy with the outcome. The relative rewards were there for both parties but ask yourself what could have occurred if “risk” became reality?
So why tell this story when it comes to risk? Risk is a “what if”. Risk is a “worst case scenario” Risk does not always develop into a major issue and loss. But risk is extremely important when it comes to assessing a projects feasibility and structure – risk will cripple, risk is catastrophic, risk kills business and in extreme cases people — if not assessed. Risk is “management” when looked at with common sense and experience.
Manage your risk, plan through it in early stage review and identify possible pain points and plan for them – have a risk assessment plan and make sure everyone considers risk always everyday. It is everywhere – plan for it!
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MW 1.0 ReThink 
