Public-private cooperation tools: Build trust

Firm level strategies


The resilience of supply chains is built at the firm-level through end-to-end visibility in supply chains, cooperation, agility and flexibility. Most firms have developed advanced risk management strategies based on past risks and shocks. As firms need to balance the economic consequences of disruptions with the costs of mitigating risks, they are best positioned to decide the acceptable level of risk and how to organise production process so as to reduce vulnerability.

Private-sector risk management strategies can adopt a range of approaches, including:

  • avoidance (of unacceptable risks)
  • postponement (producing or shipping goods once customer orders are received)
  • selective risk-taking (producing or shipping goods based on anticipated customer demand)
  • hedging (diversifying suppliers and location of production)
  • control (through vertical integration of main suppliers)
  • transferring or sharing risks (via outsourcing and offshoring)
  • security (identifying shipments at risk, facilitated by information technology).

Governments can support firm risk management strategies by reducing exposure to risks and uncertainty, ensuring they are ready to face a severe crisis, and that the impact of the disruptions created on individuals and societies are sufficiently taken into account. By anticipating, preventing, preparing for, and responding to shocks, firms can play a role in minimising disruptions. This would benefit business operations, as well as individuals and society as a whole. Responsible Business Conduct (RBC) principles and standards, for example, provide a framework to reduce the risk of supply chain disruptions and minimize social and environmental impacts as they occur.

Policy action

Note: More specific guidelines for addressing human rights adverse impacts are listed in OECD (2011), Chapter IV.
Source: Adapted from Figure 2, OECD (2018), OECD Due Diligence Guidance for Responsible Business Conduct, OECD Publishing, Paris.

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