Integrating supply chain risk into enterprise risk management

In an era defined by geopolitical uncertainty, regulatory shifts and increasing digital interdependencies, strengthening supply chain resilience has become a strategic imperative. To increase sustainability and maintain growth, companies need to understand evolving supply chain risks and adjust strategies to proactively address potential vulnerabilities.

During a recent webinar, From risk to resilience: AI-driven supply chain signals for smarter ERM, RSM leaders explored how organizations can strengthen enterprise risk management (ERM) by increasing value through implementing modern supply chain risk practices—supported by advanced technologies like RSM’s supplier risk solution (SRS).

Today’s supply chains power global commerce, linking raw materials to finished goods and connecting businesses to customers across industries. Yet this same interconnectedness also creates vulnerability. According to McKinsey’s 2024 Global Supply Chain Leader Survey, 90% of organizations reported encountering significant supply chain challenges, while only 25% said they have formal processes in place to address these risks. This gap underscores a critical reality: Disruptions are becoming more frequent and consequential, yet many companies still lack the visibility, structure and governance needed to respond at the enterprise level.

Understanding the expanded nature of supply chain risk

Supply chain risk is no longer limited to delays, inventory imbalances or operational breakdowns. It has become a transmission mechanism for a wide range of enterprise risks—including geopolitical shocks, cybersecurity incidents, climate events and evolving regulatory requirements. Because global supply chains are tightly connected, a disruption in one region can quickly cascade across multiple tiers and business functions.

This shift reflects a broader reality. Organizations must now consider not only the health of their direct suppliers, but the stability, compliance and resilience of the extended network on which those suppliers depend.

Seeing beyond tier-1 suppliers

For many companies, the most significant vulnerabilities exist several layers deep in the supply chain. Traditional review methods—manual surveys, periodic assessments or self-reported data—often provide incomplete or outdated information about overall supply chain health. As a result, risks tied to second- and third-tier suppliers remain largely invisible until they materialize.

Modern artificial intelligence-enabled tools are upending this visibility challenge. With access to extensive global datasets and mapped supplier relationships, tools like RSM’s SRS help organizations identify who their suppliers rely on, where potential disruptions might originate, and how financially or geopolitically exposed their broader network may be. This level of insight is increasingly essential as disruptions become more frequent and widespread.

Integrating supply chain risk into ERM and audit functions

To move from reactive problem-solving to proactive resilience, supply chain risk must be embedded within ERM frameworks. This means elevating supply chain insights into strategic decision making, aligning them with risk appetite and incorporating them into governance, procurement and business continuity processes.

Modern platforms make this integration more actionable by providing continuous monitoring rather than static, point-in-time assessments. With near real-time insights, organizations can anticipate shifts in supplier stability, regulatory exposure or geopolitical volatility and adjust their risk posture accordingly.

For many organizations, the most effective way to kick off integration is through a targeted proof of concept—such as piloting supply chain risk reporting within internal audit or applying advanced risk monitoring to a critical supplier segment or high-risk geography. This process allows teams to validate value quickly, build internal alignment and demonstrate how deeper visibility can directly support business objectives. This proof of concept can be facilitated or owned by the second or third line of defense.

Aligning integration efforts with the priorities of key stakeholders is equally important. Whether the goal is protecting revenue; ensuring regulatory compliance; strengthening environmental, social and governance (ESG) commitments; or improving operational resilience, supply chain risk management should be positioned not as a control exercise, but as a strategic enabler that delivers measurable enterprise value.