A production line can depend upon a component that costs very little compared with the finished product. Its value on the purchase order may look insignificant, yet the absence of that one specialised item can stop assembly, delay customer deliveries and leave expensive equipment idle.
This is how Dr Uppiliappan Gopalan opens the chapter on identifying enterprise risks in Unbroken Links, and it captures a mistake he sees made constantly across industries: financial value and enterprise importance travel on very different scales.
Why High Value Assets Attract Attention, and Small Ones Hide the Real Risk
Managers often discover such exposures only after they follow the dependency behind an objective. High value assets attract attention naturally, while low value inputs, specialist skills, shared systems or small contractual obligations can carry greater consequence because several activities depend upon them. Risk identification, Dr Gopalan argues, requires looking at consequence and dependency alongside visibility, not spend alone.
Cause, Event and Consequence: Why Vague Risk Labels Fail Leadership
One of the book’s most practically useful frameworks separates every risk description into three distinct parts. A cause or source is the condition creating exposure. A risk event is what may happen or change. A consequence is what the organisation may experience as a result.
Supplier concentration illustrates the distinction clearly. A single qualified supplier creates the source of exposure. Production interruption at that supplier is the event. Delayed production, additional procurement cost, lost sales and customer difficulty are possible consequences.
“A vague description such as cyber risk carries far less management value because it leaves the source, event and consequence mixed together.”
Start With the Objective, Not With a Generic Risk List
Suppose a business sets an objective to increase regional revenue by twenty per cent. The target immediately creates useful questions around demand, pricing, channel capability, recruitment, supply, working capital, regulation and competitor response.
Objective based identification keeps management attention connected with what the organisation is trying to achieve. A long list of generic risks can prompt discussion, Dr Gopalan writes, while an objective gives those discussions direction. What must remain true for this objective to succeed, and what could materially change that condition, often reveals more than beginning with a category label ever could.
Unbroken Links: Risk Management and Legal Compliance in Global Supply Chains by Dr Uppiliappan Gopalan is published by Pen and Paper Publication.
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