In the current business landscape, organizations rely on numerous third and Nth parties to produce goods and services. The complexity of these outsourcing activities makes it difficult to understand risks across the supply chain. At the same time, new risks are mounting, and the frequency of severe events is increasing placing new demands on risk practitioners.
As financial consequences of risks become more apparent, boards and C-suites will press for better risk analytics. Investor communities and regulators will increasingly expect organizations to quantify operational risks associated with operations. Statistics will become a standardized part of risk quantification soon.
Fortunately, techniques have emerged that improve the accuracy of risk analysis. This briefing paper offers guidelines and steps for developing a scenario-based approach to risk quantification.