Evaluate Risk


Identify and evaluate your key environmental, social, and governance risks and opportunities in your value chain and the options to address them.

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Evaluating sustainability risks and opportunities is key to ensuring a resilient and sustainable value chain.

Identify and evaluate key environmental, social and governance risks

Start by mapping out potential risks, such as potential human rights violations, potential environmental impacts, supplier reliability, transport logistics, political instability, and natural disasters. To compile a comprehensive risk list, engage relevant departments, including procurement, supply chain management, sustainability, legal, and compliance. Depending on the risk, engage suppliers, customers, and regulatory bodies for a more holistic view. Once compiled, assess each risk's severity and likelihood and your organisation's ability to mitigate it. For issues with potential for high risk, consider forming a dedicated group to investigate them further. Keep in mind that, risks are often evolving and can change suddenly.1, 2, 3

EXAMPLE: Co-op Group’s high-risk area identification process

Co-op combines stakeholder input with public human rights data to identify labour rights risk hotspots in its supply chain.4

EXAMPLE: Mars recognises farmer livelihoods as a key business risk

The agri-food company Mars Inc. found that many rice, cocoa, and vanilla farmers at the base of its supply chain were giving up farming. Mars recognised this trend as a strategic business risk due to its impact on the quality and availability of essential raw material inputs. Further investigation helped the company identify poverty as the key factor driving farmers to seek better livelihoods in urban areas.5

EXAMPLE: Risk assessment tool for public procurement in Sweden

The Swedish organisation Adda designed a sustainable public procurement (SPP) risk assessment tool to identify sustainability risks, evaluate suppliers, and prioritise based on risk and performance. The adaptable tool offers proactive SPP solutions tailored to different product categories, as exemplified in a report on China's state-imposed labour risks in ICT supply chains.

EXAMPLE: Supplier due diligence at Schneider Electric

In response to the introduction of the Duty of Vigilance in France, Schneider Electric leveraged the Responsible Business Alliance methodology and organisational intel to identify suppliers with the highest human rights and environmental risks. Schneider Electric conducted on-site audits to determine non-compliance and collaborated to create action plans for correction where needed.6

Identify risk mitigation options for reducing impacts and managing uncertainty

After risk identification and assessment, begin to devise mitigation strategies. This could involve designing contingency plans for potential disruptions. These are known as bridging strategies; they focus on quick response and recovery after a disruption.7, 8 You can also employ buffering strategies to mitigate potential disruptions.9 For instance, you may consider diversifying your supplier base or bolstering your logistics infrastructure.10, 11, 12

Another approach is to form partnerships with suppliers (and brands) for joint risk management and mitigation. Overall, it is essential to establish clear roles, timelines, and objectives for your risk management planning and regular communication with suppliers and other stakeholders. Make sure to also regularly review your risk management plan to keep it up-to-date and effective.

EXAMPLE: General Motors' risk-notification system

GM's supply chain risk-notification system combines its supplier mapping efforts with geographic risk data. In cases where disruptive events occur, GM can quickly identify and contact suppliers in the area that may be affected.13

EXAMPLE: Risk Mitigation in BMW Group's Supply Chain

BMW Group employs a three-phase approach to mitigate human rights risks in its supply chain and align with OECD guidelines.14 It integrates due diligence into procurement, standardises supplier assessments, and prioritises high-risk raw materials for detailed audits.

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Break Even Action Guides: BE04 – Procurement

This resource, developed by Future-Fit, provides practical guidance on performing supply chain hotspot assessments, specifically in sections 2 and 3. It includes a list of common hotspot issues, a matrix for categorising hotspots based on intensity, and progress indicators.

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Responsible Sourcing Tool: Explore Risk

The Responsible Sourcing Tool’s “Explore Risk” section has two parts. Part one outlines key labour rights risk factors categorised by sector and geography to help you understand how risk enters the supply chain. Part two provides a geographic map with country risk profile summaries to help you visualise where labour rights violations are most likely.

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CIPS Risk and Resilience Self-Assessment Tool

This non-sector-specific self-assessment from the Chartered Institute of Procurement & Supply will help you assess your value chain’s resilience and guide you on mitigating key risks. It takes approximately 15 minutes to complete.

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Social Risk Mapping [PAY TO USE]

This online risk mapping tool from the Social Hotspots Database helps you assess sector-specific social risks in your supply chain. It is designed to identify both risk location and significance. The comprehensive tool covers 30 social risk sub-categories and 132 risk indicators and can be integrated into LCA software tools.

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CSR Risk Check Tool

This risk assessment tool by MVO Nederland will help you quickly assess value chain sustainability risks related to a specific product or service. It will also provide suggestions on how to manage them.

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Integrated Biodiversity Assessment Tool [FREEMIUM]

This biodiversity risk assessment tool by the IBAT Alliance describes itself as your source of “the world's most authoritative biodiversity data for your world-shaping decisions.” It will support early-stage screening of biodiversity risks at a site level using three public data sets: the World Database on Protected Areas, IUCN red list species, and Key Biodiversity Areas.

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Building Resilience in Global Supply Chains

This resource by WBCSD uses two case studies to demonstrate how to build resilience throughout your supply network. It emphasises mutual dependence between businesses as well as between business and society.

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ESG Risk Analysis Tool

This freemium AI tool by Responsibly can help streamline supplier data collection, management, and analysis. It will also help you prioritise high risk areas in your value chain and better align your efforts with your ESG objectives.

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Practical Guide to Responsible Sourcing of Goods and Services

This guide by the Responsible Business Alliance offers practical guidance for responsible sourcing of goods and services. Step Four (pages 11–15) covers contract management, including guidance on performance monitoring, supplier reporting, corrective action and remediation, and closure audits.