Risk Management at warehouses and logistics platforms

Risk Management at warehouses and logistics platforms

July 1, 2018

The importance of understanding the threats a business faces.

One of the biggest changes today in the management of warehouses and logistics platforms involves the appointment of a Risk Management officer as an essential way of identifying, analysing and assessing those situations that may have a negative impact on the business, with the aim being to minimise the potential losses the organisation may have to bear.

The increase in the international movement of goods due to the sharp increase in global trade means logistics firms are generating new business opportunities that in turn increase their level of business risk. Any break in the supply chain, for example, may have a serious impact on a firm’s income statement and its relationship with its customers, leading to, among other possible outcomes, higher operating costs, a weakened brand reputation, or even the direct loss of customers.

Within this context, Risk Management has a critical role to play by identifying the origin of situations of risk in the organisation, providing it with the different options that may be adopted for their mitigation.

Some of the more salient activities in this field involve the identification of the risks inherent to logistics processes and facilities as regards, for example, the condition of premises, fire prevention and emergency evacuation measures, the physical security of installations and their protection against robbery, natural risks, as well as any breach of the rules and regulations governing the business or the sundry processes involved in handling and storing goods.

Following the fieldwork carried out in situ, the findings of the risk inspection have been set out in a final report that covers those incidents identified, listing the possible causes and their consequences (fires, accidents, safety and security, damage to goods, reputation...), furthermore assessing the probability of each event’s occurrence and its potential final impact on the organisation.

This report is a veritable Risk Map that provides an overall risk appraisal, including the submission to the company’s executive and management bodies of recommendations and plans for improvement regarding risk situations, as well as their prioritisation over time, with the ultimate aim being to reduce any possible losses to a minimum, protect the organisation’s assets, and pre-empt any tendencies that might arise in the normal pursuit of its business.

Due and proper Risk Management has numerous benefits, ranging from a greater awareness of risk as a key factor in decision-making across the entire organisation, through to the adoption of preventive measures in those aspects that may be “triggers of risk”, with the aim being to correct them or keep them under control and, as appropriate, also adjust the cover and the transfer of cost to the insurance sector.