Executive Summary
Supply chains are one of the most significant sources of climate and operational risk. However, not all suppliers carry the same level of exposure. Identifying high-risk suppliers is critical for: resilience, reporting, and operational continuity. Despite this, most organisations struggle to prioritise effectively.
1. Context: The Challenge of Supplier Risk
Organisations typically manage hundreds or thousands of suppliers across multiple regions and sectors. Risk is distributed across this network.
However, visibility is often limited.
2. What Defines High Risk
Supplier risk arises from multiple factors.
Location: Exposure to physical climate risk.
Sector: Exposure to transition pressure.
Dependency: Criticality to operations.
Opacity: Limited available data.
3. The Structural Challenge
Supplier networks are: multi-tiered, dynamic, and fragmented.
Most organisations: see Tier 1 suppliers but lack visibility beyond.
4. Why Traditional Approaches Fail
Approaches such as questionnaires, manual reviews, and targeted assessments do not scale.
They miss: indirect dependencies, concentration, and systemic exposure.
5. What This Means in Practice
Organisations often: focus on visible suppliers, overlook critical dependencies, and struggle to prioritise action.
6. What Good Looks Like
A structured approach includes:
Entity-Level Mapping: Consistent identification of suppliers.
Integration of Location and Activity: Understanding where suppliers operate and what they do.
Population-Level Analysis: Assessing all suppliers, not just selected ones.
Pattern Recognition: Identifying clustering and concentration.
7. From Reactive to Proactive
The shift is from reactive supplier management to structured prioritisation based on risk.
Closing Insight
Identifying high-risk suppliers requires more than assessing individual entities. It requires understanding exposure across the entire supplier population. This means connecting suppliers, locations, and sector activity into a unified view. By applying risk indicators consistently across this population, organisations can move from fragmented assessments to data-driven prioritisation, identifying where risk truly sits within the supply chain.