Organizations and their supply chains have a responsibility to keep the environment clean, properly dispose of waste and protect the environment and individuals surrounding their operations. While one of the best environmental risk management strategies is compliance with legislation and best practices related to the environment, sometimes the climate poses threats, despite your efforts.

Environmental risk mitigation helps protect your organization’s reputation, production and overall business performance. Strengthen your approach with an environmental risk management tool that helps you proactively suppliers and third-party business partners. Protecting your organization from environmental risk is all about gaining visibility on your supply chain.

The Types of Environmental Risk Threatening Organizations

The first step to environmental risk mitigation requires understanding the many types of risk that your organization and supply chains face—from extreme weather and climate conditions to your facilities’ impact on the environment.

Extreme Weather, Natural Disasters and Environmental Risk in Supply Chain Management

While you cannot prevent extreme weather—including floods, drought, fires and hurricanes—from affecting your supply chains, risk can still be mitigated with the right environmental risk management tool.

In today’s world of complex supply chains, organizations rely on many technologies, including wireless sensor networks and GPS tracking, to communicate and essentially run the business. And for production purposes, little, if anything, can be accomplished without electricity. A weather-related power outage can completely shut down the delivery of information to and the work occurring within your supply chain.

In addition to issues at production facilities, extreme weather can also have damaging effects when it comes to transportation of goods or services. Without the right environmental risk management strategies, the weather brings your supply chain to a halt.

Toyota’s Supply Chain Operations Significantly Impacted by a Natural Disaster

During the monsoon season of 2011, Thailand was hit with severe flooding caused by the landfall of Tropical Storm Nock-ten. This natural disaster damaged the country’s economy, halted many supply chain operations and resulted in more than 800 deaths.

Toyota’s supply chains and financials were significantly impacted by the flood. The operations of Toyota’s supply of parts were completely halted temporarily, and greatly affected for months. In the second quarter alone, profits fell 18.5%, as output was reduced in many countries. All this came after the earthquake and Tsunami in Japan earlier that year, which also damaged Toyota financially.

Protecting the Environment Surrounding Your Supply Chains

Your organization and supply chain must be in compliance with legislation and best practices when it comes to production. Protecting the environment and those who live near production facilities is an essential part of environmental risk mitigation.

Polluted water and air endanger those living nearby. When it comes to waste disposal, you must ensure you are in compliance with regulations and implement best practices for reuse or recycling of waste—and you must set those same expectations for your suppliers.

The discovery of improper waste management or pollution can result in much more than environmental damage; it can be devastating to your reputational and financial success. By monitoring your supply chain for adverse news related to environmental risk, you can address potential issues earlier to circumvent bigger problems down the line.

Manage and Prevent Environmental Risk to Prevent Supply Chain and Business Disruptions

When it comes to environmental risk mitigation, you must be proactive, not reactive. In order to ensure your supply chains are not causing a detrimental impact on the environment and to mitigate the many risks that result from natural disasters, you must gain better visibility and market intelligence on your supply chain and third-party portfolio.

Mitigate risk with Nexis Entity Insight, a fast, efficient and cost-effective environmental risk management tool. Anticipate and manage risk more effectively with a tool that leverages a wide range of market intelligence, some unavailable on the open Web, and applies the industry-standard PESTLE analysis framework (Political, Economic, Socio-cultural, Technological, Legal and Environmental).

This environmental risk management tool helps companies capture an in-depth view of reputational, regulatory, financial, strategic and environmental risks.