Predicative Resilience with financial transparency with your suppliers and vendors (public and private) for best practice risk management.

1. Predictive Resilience: Using Analytics to
Uncover the Hidden Opportunities across
Your Supply Chain
Peter Murray
Managing Director
Supply Chain Risk and Resilience
April 13, 2017

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Learning Objectives
• Evaluating third parties
• What is financial health?
• Role of financial health assessment in SCRM
• How can predictive analysis help?
• Leveraging risk management to uncover hidden opportunities
• Building financial acumen to support organizational resilience
Agenda

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Evaluating Third Parties
• SCRM & 3PRM, as a business discipline, is continuing to evolve
– Resilience is an emerging strategy
• Your third parties (vendors, suppliers, partners, etc.) are an extension
of your business, and as such, you are accountable for their risks
Do your suppliers think about risk as much as you do?
Your risksTheir risks
Your exposureTheir exposure
Your disruptionTheir disruption

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What is Financial Health?
• Provides comprehensive insight into the
financial stability, viability of third-party
partners, suppliers, vendors, and
customers.
• The Financial Health supports all critical
business functions:
Financial Health lets you see what others don’t.
• Analyze all relevant data,
free of subjective elements
using purely quantitative
methods and machine
learning techniques
• Access private company
financial statements and
public company filing data
• Account for differences
across sector, size,
strengths, and weaknesses
Lending
Selling
Buying
Partnering
Acquiring
Investing

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Procurement Credit Supplier Risk Finance Executive Enterprise
A Common Language
Transparency reveals insights that have impact
across the entire organization

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Role of Financial Health in SCRM
Weak relationships become resilient
Ambiguous processes become clear and objective
Siloed business functions become united through insights
Risk teams accustomed to reacting can now become proactive
A clear picture of financial health brings transparency to
your business

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Supply Chain / Network Disruptions
• 87% of firms experienced a disruptive incident with third parties in the past
2-3 years. 1
• 74% of firms experienced a disruption in the past year. 2
• 50% of those disruptions came from Tier 1 suppliers. 2
The risk of a disruptive event at your company
2 BCI (Business Continuity Institute). “Supply Chain Resilience Report 2015”.
Major supply
disruptions impact
the equity value of
your company …
for months

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Key Concepts – Center of Excellence
• Procurement Risk Management
• Supply Chain Risk Management
• Resilience
• Financial Health
Defining the key concepts ……

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Defining Financial Health
• Evaluating Financial Health means:
– Understanding your third party’s short-term resiliency and long-term viability
– Using financials to see deeply into a company
– Embracing the value in transparency to build better business relationships
• Financial analysis isn’t a trend – it’s a mainstay
– Critical across all departments & in every step of the
process
– Helps choose business partners in the short
& long-term
– Often a leading indicator of risk in other control areas
Financial Health
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Sourcing
On-boarding
Continuous
Reviewing
Building the
Relationship
Off-boarding
/ Resourcing

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Probabilities & Projections
Its about probabilities …..

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Global Risk Trends
Increasing risks, lower financial health
Inflection Point?

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Real World Tales
• Automotive
• Consumer Products
• DOD Value Chain
• Pharma/Medical Device
• Life Sciences
Risk, Resilience and Financial Health
It’s Tough On Your Own Much better with some help!

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From Risk to Resilience with Financial
Health
“always half
empty”
•- No clear risk
“appetite”
•- Always reacting
•- Focus on loss of
performance
when it occurs
Risk
Reactive
“building a fuller
capability”
- Using a COE
approach
- Leveraging
existing processes
and emerging
frameworks
- Working with
Financial Health;
daily
Systematic
Financial
Health “The full value -
competitive and
operating
advantage”
- Strategic
approach
- Planning ahead
- Process & People
Capability
- Embedding in
managing&
execution
processes
Predictive
Resilience
Real example – Developing Resilience

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Building Opportunities
SRM RFX
Capacity /
Demand
Modeling
Segmentation
Agility,
Transparency
E2E
How can financial health help you make better decisions?

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Practitioner Concerns SCRM and 3PRM
What boxes you in?
What You Cannot See
Your Role – Your Firms
Expectation of You
Compliance,
regulatory or
consumer
expectations
The Needs and Expectations of Your Customers
*(EFV/EFC) x (SC)SP =
Depth of
understanding of
your Supply
Network Vs.
resource capability
Are they “healthy
partners”?
*Illustrative not a real formula,
demonstrates complexity

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Opening Up the Box
Opening up the Supplier Risk Box with Financial Health
What You Cannot See
Your Role – Your Firms Expectation of You
Compliance,
regulatory or
consumer
expectations
The Needs and Expectations of Your Customers
*(EFV/EFC) x (SC)SP =
Depth of
understanding of
your Third Parties
Vs. Need for many
vendors– Are they
“healthy partners”?
*Illustrative not a real formula,
demonstrates complexity

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ISM Mastery Model
Where does financial health align as a personal capability?
• Business Acumen
• Cost and Price Management
• Financial Analysis
• Risk

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About the Financial Health System
The FHS® is a suite of tools that are systematic, simple,
scalable and working today for leading companies
across the world.
Work with our clients
to understand their critical
relationships.
1.
Collect financial statements
on clients’ behalf as needed.
Perform analysis
that is absolute, accurate, and
actionable.
Deliver an FHR®
for every priority
relationship.
3.4.
Transform management of enterprise risk
across all critical relationships, iterate, and
repeat.
2.5.

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About RapidRatings
Pioneering Financial Health. We See What Others Don’t.
The Financial Health System (FHS) provides
comprehensive insight into the financial
health of third-party partners, suppliers,
vendors, and customers.
The FHS supports all critical business
functions:
• Analyze all relevant data,
free of subjective elements
using purely quantitative
methods and machine
learning techniques
• Access private company
financial statements and
public company filing data
• Account for differences
across sector, size,
strengths, and weaknesses
Lending
Selling
Buying
Partnering
Acquiring
Investing

20. QUESTIONS?

21. THANK YOU FOR ATTENDING
PETER MURRAY
MANAGING DIRECTOR, SUPPLY CHAIN RISK AND RESILIENCE
RAPID RATINGS INTERNATIONAL
646.839.8889
PETER.MURRAY@RAPIDRATINGS.COM