Skip to content
  • Blog
  • Careers
  • Demo
  • Login
  • (408) 883-8053
  • [email protected]
Facebook-f Twitter Linkedin
  • Blog
  • Careers
  • Demo
  • Login
Menu
  • Blog
  • Careers
  • Demo
  • Login
Resilic Logo
  • Solutions
    • EventWatchAI
    • RiskShield
      • Supplier Assessment Library
    • Multi-Tier Mapping
      • Resilinc’s Supplier Network
    • Autonomous AI Mapping
    • CommodityWatchAI
  • Industry
    • Aerospace and Defense
    • Automotive & Industrial
    • Healthcare & Life Sciences
    • High-Tech & Semiconductor
  • Pricing
  • Resources
    • Learning Center
    • Special Reports
    • Events
    • Developer API
  • Company
    • About
    • Partners
    • News
  • Contact
Menu
  • Solutions
    • EventWatchAI
    • RiskShield
      • Supplier Assessment Library
    • Multi-Tier Mapping
      • Resilinc’s Supplier Network
    • Autonomous AI Mapping
    • CommodityWatchAI
  • Industry
    • Aerospace and Defense
    • Automotive & Industrial
    • Healthcare & Life Sciences
    • High-Tech & Semiconductor
  • Pricing
  • Resources
    • Learning Center
    • Special Reports
    • Events
    • Developer API
  • Company
    • About
    • Partners
    • News
  • Contact
Resilic Logo
  • Solutions
    • EventWatchAI
    • RiskShield
      • Supplier Assessment Library
    • Multi-Tier Mapping
      • Resilinc’s Supplier Network
    • Autonomous AI Mapping
    • CommodityWatchAI
  • Industry
    • Aerospace and Defense
    • Automotive & Industrial
    • Healthcare & Life Sciences
    • High-Tech & Semiconductor
  • Pricing
  • Resources
    • Learning Center
    • Special Reports
    • Events
    • Developer API
  • Company
    • About
    • Partners
    • News
  • Contact
  • Blog
  • Careers
  • Demo
  • Login
  • Customer Hub
Menu
  • Solutions
    • EventWatchAI
    • RiskShield
      • Supplier Assessment Library
    • Multi-Tier Mapping
      • Resilinc’s Supplier Network
    • Autonomous AI Mapping
    • CommodityWatchAI
  • Industry
    • Aerospace and Defense
    • Automotive & Industrial
    • Healthcare & Life Sciences
    • High-Tech & Semiconductor
  • Pricing
  • Resources
    • Learning Center
    • Special Reports
    • Events
    • Developer API
  • Company
    • About
    • Partners
    • News
  • Contact
  • Blog
  • Careers
  • Demo
  • Login
  • Customer Hub
Facebook-f Twitter Linkedin
  • Blog
  • Careers
  • Demo
  • Login
Menu
  • Blog
  • Careers
  • Demo
  • Login
Resilic Logo
  • Solutions
    • EventWatchAI
    • RiskShield
      • Supplier Assessment Library
    • Multi-Tier Mapping
      • Resilinc’s Supplier Network
    • Autonomous AI Mapping
    • CommodityWatchAI
  • Industry
    • Aerospace and Defense
    • Automotive & Industrial
    • Healthcare & Life Sciences
    • High-Tech & Semiconductor
  • Pricing
  • Resources
    • Learning Center
    • Special Reports
    • Events
    • Developer API
  • Company
    • About
    • Partners
    • News
  • Contact
Menu
  • Solutions
    • EventWatchAI
    • RiskShield
      • Supplier Assessment Library
    • Multi-Tier Mapping
      • Resilinc’s Supplier Network
    • Autonomous AI Mapping
    • CommodityWatchAI
  • Industry
    • Aerospace and Defense
    • Automotive & Industrial
    • Healthcare & Life Sciences
    • High-Tech & Semiconductor
  • Pricing
  • Resources
    • Learning Center
    • Special Reports
    • Events
    • Developer API
  • Company
    • About
    • Partners
    • News
  • Contact
  • Solutions
    • EventWatchAI
    • RiskShield
      • Supplier Assessment Library
    • Multi-Tier Mapping
      • Resilinc’s Supplier Network
    • Autonomous AI Mapping
    • CommodityWatchAI
  • Industry
    • Aerospace and Defense
    • Automotive & Industrial
    • Healthcare & Life Sciences
    • High-Tech & Semiconductor
  • Pricing
  • Resources
    • Learning Center
    • Special Reports
    • Events
    • Developer API
  • Company
    • About
    • Partners
    • News
  • Contact
  • Blog
  • Careers
  • Demo
  • Login
  • Customer Hub

Home / Blogs / Rethinking Black Swan Events for Modern Supply Chain Risk Management

Home / Rethinking Black Swan Events for Modern Supply Chain Risk Management

RESILINC BLOGS
building earthquake

Rethinking Black Swan Events for Modern Supply Chain Risk Management

Oct 29, 2015

Wayne Caccamo

Uncategorized

Black swan supply chain events have been traditionally associated with (if not formally defined as) improbable, rare, or unlikely events that have severe or even catastrophic business impact. However, as a result of a number of socio-economic factors it’s time to update our view of black swan supply chain events.

A Black Swan Event is Not a Rare Occurrence

building-earthquake.jpgFor a number of reasons, black swan events are becoming less rare. It may sound logically inconsistent to describe such events as both becoming less rare and at the same time improbable or even unimaginable. How can that be?

It’s important to distinguish between the unique characteristics or circumstances associated with a singular event and the collective probability that at least one of these singular events will happen over a given period of time. After evaluating the surrounding context, looking backward domain experts (and in some cases even laymen) can usually conclude most black swan events are bound to happen and are destined to repeat themselves. Only the Chicago Cubs seem to defy this principle. Even though some parameters may differ (such as the event’s time, location, or specific type), it is likely that many similar incidences have had similar effects in the past and that this will continue in the future.

In fact, Yossi Sheffi, author the recently published The Power of Resilience guarantees that future disruptions are going to be bigger than anything we have witnessed to date because the past is bounded and the future is unbounded. He warns, “sometime in the future, something really bad is going to happen.”

SCRM Lesson: While black swan events may make headlines, they should be addressed with the same basic approach as all other supply chain disruption events and risks. According to Sheffi, a general capability and process needs to be developed to proactively identify, quantify, and prioritize risk scenarios for mitigation, as well as processes for early detection and rapid crisis response. After all, business impact of every day minor supply disruptions and delays in aggregate typically far surpasses that of the less frequent, but more severe black swan event.

The Frequency of Black Swan Events is Accelerating

Now that we are more comfortable with the notion that black swan events—though in many cases unimaginable, are not rare—it’s a small leap to accept that black swan events will happen with increasing frequency. Note, a key element of our black swan supply chain event definition is the degree of business impact. Globalization means that the impact of events is less localized and therefore more impactful. Further, a key driver for extreme weather-driven black swan supply chain events is climate change – a socio-economic challenge that will not be addressed or reversed anytime soon. Moreover, technology and hyper-connectedness of suppliers, brands, and OEMs make cyber disasters more likely and impactful. Finally, escalating geopolitical unrest can be one element of a perfect storm resulting in a black swan event.

SCRM Lesson: Don’t be preoccupied with the rarity, the unprecedented, or unimaginable nature of black swan events. This leads to a defeatist and illogical conclusion that supply chain risk management is futile. Focus on mitigating the business impact regardless of event timing, severity, type, location, etc. with proactive risk mitigation strategies prioritized by value-at-risk.

An Event Can Achieve ‘Black Swan’ Status Base on the Response Rather than the Event Itself

Hurricane Katrina (2005) may be considered a black swan event, but not because disasters of that magnitude were unprecedented, unimaginable, or that its particular location and specific type was unforeseen. Everybody knew that the city of New Orleans is at the base of a geographic soup bowl, whose brim once breached could lead to epic flooding. Hurricane Andrew back in 1992 raised that spectre. What most could not imagine is that an extreme weather event could wreak that much havoc in the U.S., and how poor the disaster preparation and federal crisis response could be.

SCRM Lesson: Planning and response preparedness can head off a potential black swan event before it goes down in history as such.

In sum, the general answer is to build a resilient enterprise that anticipates, prepares for, and responds rapidly to all types of events, ranging from the severe “black swan” variety to every-day supplier disruptions and delays.

Factory Fires: The Top Supply Chain Disruption

White Paper

Factory Fires: The Top Supply Chain Disruption

Download Now

Recent Posts

4 Major Supply Chain Trends Q4 2022

What would happen if China invaded Taiwan?

China COVID crisis: Groundhog Day for SC managers

EV segment will likely depend on China for many years

EU inflation hits multiple manufacturing sectors

Resilient supply chains require a shift in procurement strategy

Adderall one of many drugs, medical supplies at risk

Resilinc study: fire risks grow while easy mitigations are often ignored

About Resilinc

We’re the world’s leading supply chain monitoring, mapping, and resiliency solution. Over 100k organizations partner with us to take their SCRM programs from reactive to resilient.
Request Demo

Recent Blogs

Loading...
A photograph of a port in Taiwan.
Jan 24, 2023
5 MIN READ
Resilinc Editorial Team

4 Major Supply Chain Trends Q4 2022

Supply chains across every industry had their ups, downs, and disruptions in 2022. From the...
Commodity management, Geopolitical, Supply Chain Disruptions
Resilinc’s Special Report: Will China Invade Taiwan For TSMC - Top Insights and Preventive Measures
Jan 17, 2023
4 MIN READ
Resilinc Editorial Team

What would happen if China invaded Ta...

One day in August 2022, a group of military and defense strategy experts gathered in...
Geopolitical
Resilinc’s Special Report: China's Latest Outbreak - Top Risks to Your Supply Chain
Jan 10, 2023
3 MIN READ
Resilinc Editorial Team

China COVID crisis: Groundhog Day for...

After managing a seemingly endless series of crises arising from the pandemic, supply chain managers...
Coronavirus, Supply Chain Disruptions
Read All Blogs

Who's in your supply chain?

Better visibility starts now

Email Now|Call Now|Chat Now

Receive our monthly NewsWatch digest

Subscribe
Resilinc Transparent Logo

Most Trusted, Cognitive Supply Chain Risk Management Platform

Solutions

Blog

Careers

Company

  • About
  • News
  • Events
Menu
  • About
  • News
  • Events

Resources

  • White Papers & Reports
  • Case Studies
  • On-Demand Webinars
Menu
  • White Papers & Reports
  • Case Studies
  • On-Demand Webinars

Follows Us

Facebook-f Twitter Linkedin

Sales: [email protected]
Support: [email protected]
Partnerships: [email protected]

Resilinc Transparent Logo

Most Trusted, Cognitive Supply Chain Risk Management Platform

Company

  • About
  • News
  • Events
Menu
  • About
  • News
  • Events

Resources

  • White Papers & Reports
  • Case Studies
  • On-Demand Webinars
Menu
  • White Papers & Reports
  • Case Studies
  • On-Demand Webinars
  • Solutions
  • Blog
  • Careers
Menu
  • Solutions
  • Blog
  • Careers

Follows Us

Facebook-f Twitter Linkedin

Sales: [email protected]
Support: [email protected]
Partnerships: [email protected]

© 2023 Resilinc Corporation. All rights reserved.

Data Security

Privacy Policy

Discover how the latest China COVID-19 crisis can derail your supply chain

Learn the latest supply chain bottlenecks that can be hurting you.

           Learn More