Welcome Risk to the Table
Talking with retailers for this month’s cover story on risk management, I flashed back to the days when I began writing about supply chain in the retail industry. In corporate retail, risk management today is where supply chain was in the mid-’90s.
Then it was about fostering an appreciation for retail logistics that encompassed more than transportation management and distribution centers. Now it’s about developing an understanding that risk entails so much more than just insurance policies and claims management.
Again, it’s about elevating a back-room department to a board-room contributor.
Twelve years ago when I asked retailers about supply chain, I found myself chatting with transportation managers about dedicated carriage, route optimization and just-in-time deliveries. Sometimes I’d be transferred to the operations department or possibly a procurement executive. Rarely was there a director over the all-encompassing supply chain function—and even rarer were supply chain executives who had risen to the top echelon of corporate management.
What I found most ironic was that logistics and supply chain functions in the ’90s, while not seated at the right hand of c-level executives, were deemed to be proprietary competitive advantages that had to be closely guarded from public discussion. Risk management is in a very similar position today.
My recent attempts to discuss the topic of risk management with retailers were usually met with one of two responses. Either the risk manager worked under the legal or finance department and was not allowed to talk on the record, or my contact in corporate communications didn’t have a clue where to send me because there was no individual with a risk-management title. Operations, security and human resources were typically the departments I was routed to.
Fortunately, Carol Arendall, senior director of risk management at OfficeMax and an industry leader with more than 20 years experience in risk management, talked at length about how OfficeMax has elevated risk management to an enterprise-wide philosophy.
If you haven’t already read her comments in the cover story (see page 27), take a minute to do so—especially if you are a supply chain executive who might think risk management isn’t a topic that concerns you. Throughout the cover story you’ll find quotes and statistics that suggest supply chain is a critical focal point for risk managers.
In addition to OfficeMax, there are other retailers raising the bar on risk management, including Wal-Mart, Target and The Home Depot. Even retailers who chose not to speak publicly have huge concerns about risk management.
Unfortunately, at the annual conference hosted by the Risk & Insurance Management Society (RIMS) in April there was only one session dedicated specifically to retail. Belk Department Stores and Abercrombie & Fitch presented at this session, which was closed to the press and attended by 65 people. However, the RIMS conference had approximately 5,000 paid attendees.
What that suggests is that retailers need a risk-management event tailored specifically to the retail enterprise—and that is exactly what is scheduled to occur.
Managing Risk @ Retail, to be held June 24-26, in Atlanta, will include presentations from risk-management consultants, industry experts and risk-management executives from retail organizations including The Home Depot, Target and Royal Ahold.