Preparing for disruptions through early detection

Abstract

Different disruptions have different degrees of impact, which affects how companies prioritize risk management efforts; a tsunami that drags a factory into the sea is more serious than a shortage of some part. Many risk management experts categorize potential disruptions by two dimensions: likelihood of occurrence and magnitude of impact. However, disruptions also vary on a crucial third dimension: their detection lead time. Detection lead time is defined as the lead time between knowing that a disruptive event will take place and the events. Detection lead time varies widely, depending on the type of disruption and the vigilance of the organization. One of the key data sources for the most common types of business disruptions is weather monitoring with high- resolution data. Companies can reduce the impact of a disruption by being prepared to deploy a timely and effective response.