# What is supply chain risk management?

> Supply chain risk management (SCRM) identifies, assesses and reduces the risks that could disrupt supply. Types of risk, the process and how to start.

Source: https://www.procol.ai/answer/what-is-supply-chain-risk-management/
Author: Shivangi Singh, Senior Content Writer (Procol)
Published: 2026-10-19

Supply chain risk management, often shortened to SCRM, is the practice of identifying, assessing and reducing anything that could interrupt the flow of goods, services and information from your suppliers to your customers. It covers your direct suppliers, their suppliers, logistics, geography, finance and compliance.

## The main types of risk

- **Supplier risk.** A key supplier fails financially, loses capacity or delivers poor quality.
- **Geopolitical and regulatory risk.** Tariffs, sanctions, export controls and changes to trade rules.
- **Logistics risk.** Port congestion, freight cost spikes, route closures.
- **Environmental risk.** Floods, fires, earthquakes and extreme weather at a supplier's site.
- **Cyber and data risk.** A supplier breach that exposes your data or halts their production.
- **Demand and price risk.** Sudden swings in commodity prices or in your own order volume.

## How the process works

1. **Map the supply chain.** Know which suppliers, sites and routes each critical product depends on, including tier two where possible.
2. **Assess each risk.** Score likelihood and impact so you focus on what matters.
3. **Mitigate.** Dual-source critical items, hold safety stock, qualify alternative suppliers, write contingency clauses into contracts.
4. **Monitor.** Track supplier financial health, certifications, news and performance continuously rather than at annual review.
5. **Respond and learn.** Have a playbook for disruption and update the risk register after every incident.

## Where to start

Most teams start with a simple matrix of critical suppliers against risk categories, then build monitoring on top. Supplier data that lives in a single [supplier management](/ai-supplier-management/) system, with documents, scorecards and alerts in one place, makes continuous monitoring realistic. Related answers: [What is supplier performance management?](/answer/what-is-supplier-performance-management/).

## Go deeper

- [What is Supply Chain Risk Management (SCRM)? | Definition & Steps](https://www.procol.ai/blog/supply-chain-risk-management/)
- [Vendor Risk Management (VRM): A Complete Guide 2026](https://www.procol.ai/blog/vendor-risk-management/)
- [Third-Party Risk Management (TPRM): Types, Process & Best Practices](https://www.procol.ai/blog/third-party-risk-management/)