Spending on operational risk management to increase in 2007

Emphasis and spending on operational risk management will increase substantially in 2007, according to a recent study by AMR Research.

The study reveals 46% of firms surveyed plan to implement or evaluate technologies for risk management in the next one to two years.

The emergence of risk management as a critical practice is based on the business need for global sourcing strategies, increasingly complex contract manufacturing relationships, and the greater number of natural and political events that can disrupt the supply chain, according to AMR.

Supplier failure and continuity of supply is the Number 1 risk factor for 28% of firms, the survey says. Events such as the Enron scandal, 9/11, health scares such as SARS and avian flu threats, the Asian tsunami and Hurricanes Katrina and Rita have forced companies to re-evaluate their preparations for catastrophes and unplanned events.

Other survey results include:

* 33% of firms have dedicated budget line items for supply chain risk management activities.

* 54% of firms plan to increase their budgets for risk management over the next 12 months.

* The top areas of application spending to support supply chain risk management are sales and operations planning, inventory optimization, business intelligence and supply chain visibility and event management applications.