Governance, Risk Management and Compliance (GRC) is becoming increasingly core for conducting sound and trusted global trade and supply chain operations in the age of web 3.0 and beyond.
As global trade and supply chain operations move further towards automation, an increased list of risks evolve, and a multitude of vulnerabilities arise in many fronts. These fronts include goods and products authenticity, data privacy and ownership considerations, climate change, and regulatory compliance - such as the classification of goods and products, imports safety and permissibility, and use of legal identifiers.
In today's 24X7 interconnected world, the ability to form large scale and end-to-end trade and supply chain ecosystems is no longer an ambition but is happening. It is therefore imperative for entities of all sizes to establish integrated GRC practices that safeguard those ecosystems, allowing for early planning and timely management of vulnerabilities to reduce costly harms and threats, and create an agile, resilient trade and supply chain environment.
Here are some of the multiple ways to build a hyper resilient trade and supply chain environment, and which organizations aspiring to lead in the space must consider as minimum standards for excellence, including (but not limited to) the following:
1. Architecting trade and supply chain operations in a way that fully comply with applicable federal and state laws and regulations, as well as directives and rules issued by agencies such as the US Customs and Border Protection is the first step towards building a resilient GRC environment.
2. Developing comprehensive and integrated "Source to Business / Consumer" processes that are backed by stringent governance practices and protocols, and aligned by design with leading practices is key to future proofing all flows of goods and products in the country and across borders against risks.
3. Following globally accepted best practices and recommendations issued by leading organizations such as The World Trade Organization (WTO), GS1 Organization (for e.g. GTINs and UPCs), and local and regional customs authorities and unions mandates (for e.g. EU Customs Union) to help with bolstering effective governance and achieving compliance with the requirements set forth for goods and products classification, identification, processing, inspection, clearing and reporting - leading to drastic improvements in trade and supply chain activities across geographies.
4. Like many sectors of the global economy that got affected by the Covid-19 pandemic, the global trade and supply chain sector received its fair share, and the ripple effects it has witnessed, as a result, were aggressive and intense, causing the sector to suffer huge disruptions and restrictions in the flow of goods and products which led to increased lead times, backlogs and global shortages in many parts of the world.
Therefore, "Contingency and Business Continuity" planning should no longer be a nice to have proposition but crucial for sustaining trade and supply chains over the medium and long term and under all conditions.
5. Global trade and supply chain sector continues to be prone to climate risks more than ever before, whether it be with respect to the large fuel and oil consumption by air carriers and large ships and vessels traveling across the different continents, or the excessive emissions and potential dumping on the way from these air carriers and large ships and vessels cruising the world over from points of origin to destination and way back.
This necessitates developing climate risk and mitigation strategies that are based on leading practice frameworks (for e.g. TCFD) and translatable into comprehensive emissions tracking and reporting mechanisms to gauge progress on addressing climate change vulnerabilities.
6. Cybersecurity and Ransomware attacks on data and data protection from criminals is another threat that is becoming increasingly apparent. With the criminal's ability to bring supply chains to halt with their ransomware attacks as in the cases of Colonial Pipeline in the US [1], the airline stoppages at peak travel times because of software release problems [2], critical country infrastructure can get very vulnerable very quickly [3]. The cost of redress for such incidents and bringing back systems quickly without affecting operations can also be very large. It is very important for organizations to establish the processes for data security, business continuity and reduce vulnerability from weak processes.
Finally, we believe that proper risk management is the first step towards elevating the ecosystem competitiveness; reducing costs and downtime in moving goods and products; eliminating waste incurred on the way, to the most possible extent, and supporting the achievement of maximum degrees of compliance with globally accepted goals such as Sustainable Development Goals (SDGs) and country-wise mandates.
The views expressed in this article are of Makki Elfatih (Hkdolts) and Laxmi Ramanath (La Meer Inc.) and does not constitute a professional nor a legal advice. Let's connect at engage@hkdolts.com or info@lameerinc.com
#RiskManagement, #GRC, #Compliance, #SupplyChainRisks, #GlobalTrade, #Climaterisks, #Cybersecurity, #ClimateChange
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