Risk, Compliance, Safety, and Sustainability
Risk, compliance, safety, and sustainability tests whether you can identify, prioritize, and mitigate supply chain risk while meeting regulatory, safety, and environmental obligations. Expect questions on FMEA, business continuity, supplier risk, trade compliance, OSHA-style safety, and carbon scopes.
Core rules
- Risk management identifies events, assesses likelihood and impact, and selects mitigation: avoid, reduce, transfer, or accept. A risk register needs owners and review dates.
- FMEA scores severity, occurrence, and detection, often multiplying them into a risk priority number (RPN). High severity deserves attention even when RPN is moderate.
- Business continuity uses redundancy, dual sourcing, buffer stock, alternate routes, and recovery time objectives. Single sourcing lowers cost but concentrates risk.
- Compliance covers customs classification, valuation, origin, Incoterms, sanctions, product safety, and records. It is not only a procurement task.
- Safety controls include training, guarding, pedestrian segregation, lockout/tagout, ergonomics, and leading indicators such as near-miss reporting.
- Sustainability distinguishes Scope 1 direct emissions, Scope 2 purchased energy, and Scope 3 value-chain emissions. Scope 3 is usually the largest and hardest to measure. Circularity and ESG reporting extend beyond carbon.
Worked example
A supplier failure mode has severity 8, occurrence 4, and detection 3: RPN = 8 x 4 x 3 = 96. A packaging failure mode has severity 4, occurrence 6, and detection 6: RPN = 144. The packaging mode ranks higher on RPN, but the supplier failure has much greater severity and may warrant action first because the consequence is severe and hard to detect. RPN alone is a triage tool, not the decision.
Traps that cost marks
- Prioritizing by RPN threshold while ignoring high-severity, low-RPN risks.
- Treating compliance as a procurement-only or customs-only issue.
- Omitting Scope 3 emissions because they sit outside direct operational control.
- Using only lagging safety metrics such as injuries and ignoring near misses.
- Assuming dual sourcing removes risk; it can add qualification and coordination risk.