Supply Chain Risk Management Innovation

Risk Management

Jeff Bartel

Chairman and Managing Director

Efficient supply chain risk management is crucial for businesses across every industry, and it directly influences competitiveness, profitability, and customer satisfaction. With today’s focus on complex international trade, quick tech advances, and changing consumer tastes, a well-run supply chain needs on-time deliveries, cost control, innovation, risk reduction, and flexibility. Additionally, it supports sustainability by optimizing resource usage and reducing environmental impact.

Modern Supply Chain Risks

Supply Chain Risk Management

Risk management is necessary as supply chains become more global and complex and are exposed to increased potential risks, ranging from natural disasters and geopolitical pressures to supplier troubles and regulations. Effective management strategies help businesses anticipate, assess, and mitigate threats, ensure uninterrupted operations, and consistently deliver sustainable products and services. 

In terms of sustainability, companies committed to environmental and social responsibility face more scrutiny and risk of damaged reputation. Organizations safeguard their sustainability commitments by managing risks related to ethical sourcing, environmental compliance, and social impact to maintain consumer trust.

Inadequate Risk Management

Inadequate planning for risk management in the supply chain can lead to harmful business consequences. 

  • Supplier disruptions can result in production delays and delivery failures, negatively affecting revenue and market competitiveness.
  • Financial losses from unforeseen supply issues can tarnish a brand’s image, erode consumer trust, reduce market share, and impact future profitability. 
  • Regulatory non-compliance can result in significant fines and legal consequences that strain a company’s resources and reputation. 

Innovative Approaches in Supply Chain Management

Innovation in the supply chain is continuously evolving, with changing trends and innovations shaping the landscape. 

  • Sustainability is a critical focus, with companies prioritizing eco-friendly practices, circular supply chains, and ethical sourcing to meet consumer demand for environmentally conscious products. 
  • With the recent COVID-19 pandemic, the adoption of responsive supply strategies has increased the need for supplier diversification and reducing dependency on far sources. 
  • Data analytics and real-time monitoring are integral for decision-making, allowing companies to identify changing risks and opportunities in the global market.
  • The increasing integration of advanced technologies like artificial intelligence, blockchain, the Internet of Things, and automation enhances visibility, predicts demand, and optimizes logistics:
    • AI offers data-driven insights for improved forecasting and cost reduction.
    • Blockchain ensures transparency, fights counterfeiting, and builds trust. 
    • IoT provides real-time visibility and quality control.
    • Automation and robotics streamline operations and production.

Mitigating Supply Chain Risks Effectively

Vendor Management

Effective vendor and contract management are essential in supply chain risk mitigation. This management requires careful vendor selection, onboarding due diligence, clear contractual obligations, and ongoing performance reviews. Proactive management helps businesses identify, assess, and respond to risks, promoting flexibility, continuity, and sustainability in the broader global marketplace.

Business Continuity Planning

Business continuity planning involves the development of strategies and protocols to maintain essential operations during disruptions, whether caused by natural disasters, geopolitical issues, or other unforeseen events. On the other hand, diversification strategies aim to reduce reliance on a single source or region by diversifying suppliers, transportation routes, and manufacturing locations. These strategies help distribute risk, ensuring a disruption in one area doesn’t halt the entire supply chain.

Insurance Protection

Insurance protection is necessary for supply chain risk mitigation, providing financial security during disruptions covering property damage, cargo delays, and other unforeseen incidents. Businesses strategically using insurance can reduce financial exposure and ensure supply chain stability during unexpected challenges.

Integrating Innovation into Supply Chain

Incorporating supply chain innovations into processes requires strategic investments in digital technologies like IoT, AI, and blockchain to boost visibility and transparency. Collaborating with startups and technology partners will inject fresh ideas and solutions. Building an innovation culture encourages process improvements, with regular performance assessments and stakeholder feedback identifying areas for innovation, and benchmarking against industry leaders helps monitor emerging trends and offer valuable insights.

Examples of Company Innovation

Several leading companies have used supply chain innovation to gain significant competitive advantages.

  • Amazon revolutionized the e-commerce industry using AI-powered predictive analytics that predict customer demand and enable accurate inventory management and speedy deliveries.
  • Tesla’s vertical integration approach and use of data analytics transformed the automotive supply chain, allowing it to boost production and rapidly adapt to market shifts.
  • Apple’s supply chain innovation includes supplier partnerships, like exclusive deals with chip manufacturers, that ensure a steady supply of components and maintain a competitive edge in the market.

Supply Chain Risk Management and Innovation Challenges

The high initial investment in using advanced technologies and reengineering existing processes, combined with resistance to change within organizations, can slow innovation adoption. The fast pace of tech advancements means that cutting-edge can quickly become outdated and require additional revision. Also, the need for an intense cybersecurity focus to protect sensitive supply chain data is a concern. Overcoming these challenges requires effective risk management planning for a proactive approach emphasizing change, flexibility, and a commitment to staying ahead of emerging technologies and best practices.

By reducing the fear of loss, companies can embrace calculated risks, experiment with innovation, and adapt quickly to market changes. This investment provides safeguards when managing supply chain risk, cultivates an environment for innovation, enhances competitiveness, and promotes company strength.

Insights on Third-Party Risk Management

Risk Management

Jeff Bartel

Chairman and Managing Director

Third-party risk management should be a key part of any current corporate strategy. This means looking closely at the risks of working with outside partners, suppliers, vendors, and service providers. With cyber threats, strict rules, and complicated global supply chains becoming more common, having a strong plan for dealing with risk is a major part of running a responsible business.

Third-Party Risk Management Concerns

With businesses reliant on external vendors, suppliers, and partners to support operations, they’re often exposed to potential consequences. The four main concerns involved with TPRM include:

Business Disruptions

If external partners fail or face issues, it impacts a company’s supply chain, causing delays, service problems, and financial losses. Whether it’s supplier financial troubles, distribution shortfalls, or cyberattacks on a key vendor, disruptions highlight the importance of planning and assessing risks.

Reputational Damage

Companies spend years building their brand, but one third-party partner mistake can cause harm. Customers and stakeholders will blame the main company, no matter if a third party caused the problem. Whether it’s environmental factors, labor issues, or cybersecurity weakness, reputational damage erodes trust and leaves lasting negative effects.

Regulatory Non-Compliance

If third-party partners don’t follow the rules in very regulated industries, it can lead to major consequences like fines, legal problems, or business closures. To reduce risk, companies must set up strong due diligence processes and ensure partners meet all necessary regulatory standards.

Data Breaches

In today’s interconnected world, as companies share sensitive customer information or business secrets with third parties, breaches become a risk. If a vendor breaks security, it can cause a breach that puts the main company at risk. The loss of customer trust and financial and legal consequences are enough to bring down a business.

Why Companies Are Investing in Enterprise Risk Management

Enterprise Risk Management is a strategic approach to identifying, assessing, and reducing business risks and helps promote long-term health and value. Factors leading companies to invest in managing third-party risk include:

  • Reducing Third-Party Incidents: Many businesses rely heavily on third-party vendors and partners, and strong Enterprise Risk Management practices assess risk and reduce vulnerability. This includes evaluating vendor cybersecurity, supplier safety and quality standards, and financial stability.
  • Increased Regulatory Scrutiny: Regulatory oversight is continually growing, especially in finance, healthcare, and data privacy, and ERM offers a structured framework to assess and address compliance risks to reduce fines, prevent legal issues, and safeguard reputational integrity. 
  • Cost Reduction: ERM is an effective cost-saving tool and encourages investments in risk reduction with high returns. Identifying and mitigating risks early prevents disruptions, lowers insurance costs, reduces legal expenses, and optimizes resource allocation.
  • Internal Compliance: ERM adoption is led by the need for internal compliance to build trust among investors, customers, and employees. Aligning internal processes with industry standards is essential, and ERM encourages a compliance culture that promotes organizational accountability, transparency, and risk awareness.

Implementing Third-Party Risk Management 

Executing a third-party risk management framework safeguards business operations and reputation while maintaining a healthy supply chain. Several key components play an essential role in identifying, assessing, and mitigating risks.

  • Screening and Background Checks: When partnering with new third-party organizations, it’s important to conduct thorough due diligence. This involves assessing their financial stability, legal history, reputation, and past incidents or compliance issues. Effective background screening offers initial protection against potential problems.
  • Third-Party Questionnaires: This helps gather essential information from partners about internal controls, cybersecurity measures, and regulatory compliance. They also provide structured assessments of risks associated with a specific third party and ensure they meet requirements.
  • On-Site Inspections: These are crucial in evaluating a third-party’s processes, security, and contract compliance. Inspections offer a close view of capabilities and verify questionnaire information.
  • Ongoing Monitoring: Business relationships evolve, and third-party risk solutions change, so regular monitoring helps ensure ongoing compliance to detect new risks. It involves reviewing financial reports, conducting audits, and staying updated on third-party partner industry developments.

Business Sectors and Third-Party Risk Management

TPRM risk management is a concern for organizations in nearly every business sector, and each faces unique challenges in managing external and partner risk. Some of the most notable sectors include:

  • Energy Sector: The main challenge here is ensuring the reliability and safety of partnered third-party suppliers and contractors since disruptions or safety issues can have major consequences. Failures in areas like construction and maintenance can lead to catastrophic incidents, environmental damage, and reputational harm. Strict adherence to safety laws, environmental regulations, and compliance evaluations is critical.
  • Financial Sector: The financial sector faces challenges due to heavy regulation and the need for third-party vendor risk management that follows financial rules and data security standards. Because financial institutions share sensitive customer data with other providers, comprehensive third-party cyber risk management checks and continual monitoring to prevent data breaches and regulatory penalties are required.
  • Life Sciences Sector: In life sciences like pharmaceuticals and healthcare, maintaining product quality and regulatory compliance is crucial, especially internationally. Companies must conduct accurate due diligence on suppliers to verify material quality and safety, or it may lead to product recalls, legal issues, and reputational damage.
  • Manufacturing Sector: Manufacturers rely on a network of suppliers and contractors for materials, and supply chain delays or failures can result in financial and production losses. Manufacturers must implement strict quality control processes and contingency plans to maintain product integrity and customer satisfaction.

Hamptons Group and Third-Party Risk Management

Businesses face challenges throughout the third-party risk management life cycle, requiring a strategic approach and proactive measures to reduce disruptions and maintain a healthy environment. Enterprise Risk Management addresses many risks, including those tied to third-party incidents, regulatory compliance, cost reduction, and internal compliance. Successful strategies and implementation are crucial to avoid third-party actions that create far-reaching consequences.

At Hamptons Group, we provide guidance and strategic advice to businesses concerning operational challenges just like these. Visit our website for more information.

The Impact of Social Venture Capital on Society

Private Equity

Jeff Bartel

Chairman and Managing Director

Venture Capital as a Force for Societal Change

While traditional venture capital investment continues to provide investors with opportunities for financial reward, impact investing and social venture capital are beginning to take center stage in the investment arena. Venture capital projects with a potentially positive impact on society provide investors with an opportunity to return profits while supporting the most critical, necessary societal changes. Often supported by both the public and the public sector, there are many advantages to social venture capital. 

Trends in Social Venture Capital in 2022

Venture capital grew throughout 2021 and into 2022 after exiting the disruptions of 2020. It was up $332 billion in the first three quarters of 2021 compared to the same period in 2020, and early-stage funding was up by more than 100%. Despite that growth, venture capital did not see the types of growth in ESG considerations that other investment areas did. That creates a significant opportunity for growth in social venture capital in 2022 and beyond.

Over the past year, movement in social venture capital indicates many firms and sectors are poised for that growth. Venture capital collaborations are moving to improve practices across the industry to support diversity and other critical missions, and many firms are hiring directors of sustainability and other professionals meant to steer investments and initiatives in ESG directions.

What Are the Main Advantages of Social Venture Capital?

Social venture capital offers many benefits for firms, businesses, entrepreneurs, and the community or society. Some of the benefits of social impact investing and social ventures include:

  • Better access to funding sources. Governments and other agencies offer incentives for social impact investment, making investors of all types more likely to enter the pool. In addition, channels such as crowdfunding and angel investments are typically easier to access when a mission backs the venture.
  • Increased service to the community. Services developed in social impact finance tend to be more relevant to community needs and more likely to solve known social or environmental problems.
  • Easier buy-in. ESG venture capital firms act on agreed-upon environmental, social, and governance missions. Because of that, it is easier to get buy-in from all stakeholders because the mission is clear, and most people can stand behind it.
  • Greater diversity. Consumers increasingly buy from brands they believe support important missions and social responsibility. Social venture capital tends to lead to increased diversity naturally.

Does Social Venture Capital Have Any Disadvantages?

Social venture capital is not without disadvantages. For example, social entrepreneurs relying on social venture capital may give up control to get funding. In addition, a lack of historical case studies may make it difficult for social entrepreneurs to convince potential investors. This may be challenging until social venture capital becomes a long-term trend.

The Dual Nature of Social Impact Investing

One of the challenges leading to investor hesitance for social impact investing is its dual nature. Investors and venture capitalists historically were concerned with the return on their investments. The bottom line can not be ignored, as investors that pour money into ventures that do not perform go out of business quickly. But social investors are also concerned with how the venture performs with regard to social or environmental factors, including diversity, sustainability, reduced emissions, or policies that provide for the community.

 A business woman investor examines solar panels while holding her notebook with social venture capital impacts listed.

Social Impact Investing To Cool the Planet

One growing area of social impact ventures has to do with the environment. Social entrepreneurs are leveraging innovation, sustainability, and other processes to create products or provide services in a way that safeguards the planet. Climate impact investors are putting money behind those efforts, funding businesses and efforts that keep the planet central to all missions.

Venture Capital to Reduce Poverty

In the same way, for-profit and nonprofit venture capital investors seek to improve the quality of life of people across all borders. For example, many are looking at ways venture capital can reach the poor in developing countries. Funds from private and public sources are being used to educate and train people in these nations to help them develop businesses, local economies, and even entire infrastructures that might lead to longer-term profits or prosperity. Again, the efforts come up against significant challenges, including currency risk, cultural barriers, and long-term poverty that can be difficult to change.

Removing Barriers for Minority Entrepreneurs

Women, Black, LGBTQ, and other minority entrepreneurs have historically found it challenging to get funding for several reasons. First, historically, not many partners in venture capital and investment firms match these demographics. People often invest in ventures that make them feel comfortable, which can mean a trend of investors funding ventures for and about people that look and act as they do.

Cultural and societal barriers, including systemic racism, also play a role in reduced funding opportunities for minority entrepreneurs. However, as more investors seek social impact ventures and awareness about diversity needs continues to rise, those trends are changing. As a result, venture funding to minority businesses has been up in recent years, though there is still a lot of ground to cover, as it remains small compared to the entire funding pie.

How Do You Measure the Impact of Social Venture Capital?

The first step in measuring the impact of social venture capital is to define why it matters and what success looks like for all involved. The second step is finding a numeric measurement that can help indicate performance.

If someone is trying to create more diversity, a good metric of success might be how many of their venture investments are run by or related to minorities. Investors interested in climate impact investing might want to measure the emissions associated with their portfolios.

Going beyond measurement, social venture capitalists might rely on case studies to demonstrate success in a more narrative format. Case studies can raise additional awareness and funds and illustrate the impact on investors and other stakeholders.

Examples of the Effects of Social Virtual Capital on Society

Social virtual capital has plenty of positive effects on society. For example, a venture capital fund that seeds startups helps businesses get off the ground. But a social venture capital fund that specifically seeds startups with a community mission does more than that: It helps a business help others. Likewise, a social impact investor that puts money behind ideas that introduce sustainability into sectors that do not tend toward eco-friendly processes helps those businesses grow and protect the environment.

Ultimately, social venture capital can change the world. Investors must do so, however, with one eye focused on change while the other eye remains trained on the bottom line. It can be a problematic duality to walk, but it is critical to the future success of communities, nations, and even the planet.

Projecting the Market Growth for Integrated Risk Management


Jeff Bartel

Chairman and Managing Director

A robust integrated risk management approach is becoming critical for businesses of all sizes and sectors. Increased cyber risks, rising demands on governance, and growing FinTech reliance are just some factors spurring growth for integrated risk management services.

Predicted Market Growth for Integrated Risk Management

Estimates of the market growth for integrated risk management are substantial. Gartner estimated year-over-year growth from 2014 through 2016 at around 17% in 2017, predicting continued growth of 13.4% through 2020. Growth predictions are even more favorable for the look forward through 2027. The integrated risk management market size is expected to grow at a rate of 18.7% CAGR, reaching $28.87 billion in value by 2021. That is an increase of more than $20 billion in less than a decade.

Key Factors for the Growth of Integrated Risk Management

IRM approaches are complex, and they address numerous challenges and threats. However, a few factors stand out as being significant drivers in the growth of IRM markets.

A Rise in Data Breaches

Data breach numbers continue to rise, with record-setting numbers in 2021. According to the Identity Theft Resource Center 2021 report, data breaches jumped 68% from 2020 to 2021, driving the number to the highest total on record in any year. Data attacks will not suddenly decline in the future, and the demand for proactive defenses against cyberattacks drives tech-related growth in risk management markets.


New Regulatory Frameworks and Integrated Risk Management

The National Institute of Standards and Technology and the U.S. Securities and Exchange Commission are just two organizations advising increased regulatory strategy to support risk management — particularly when it comes to digital security or finances. For example, the SEC proposed rules require advisors and funds to disclose cybersecurity risks publicly. Previously, most frameworks required public disclosure when a major breach occurred. Still, this new language might put the onus on businesses to proactively alert stakeholders of all types to potential issues and weak spots in security.

Business woman using a laptop to predict the growth of integrated risk management.

IoT and FinTech Challenges

Of course, those risks do exist for all organizations. No modern business is without some connection to the internet, and an Internet-of-Things world that relies heavily on integration and data creates risk channels.

For example, financial processes of all types rely on digital processes. Increasing numbers of people turn to online and mobile banking, managing their accounts and depositing checks from smartphones. That represents a multitude of channels, people, and processes that could leave a bank and its customers at greater risk of experiencing data breaches, fraud, or other issues.

The risks increase as IoT connects and networks more touchpoints. For example, if someone sets up automatic bill pay via a checking account, they link those bill accounts to their bank account. Or, if someone signs up for a service that reports rent and utility payments to credit bureaus to boost their credit score, they often have to integrate their bank account as well.

For individuals and businesses alike, increasing connections goes hand-in-hand with increased risk.

Industries Driving the Growth of Integrated Risk Management

No one is immune to risk. More than 40% of data breaches involve small and midsize businesses. These attacks span all industries, though hacks in 2021 were up in the following industries by extreme amounts year-over-year:

  • Education and research saw a 75% increase in attacks
  • Healthcare experienced a 71% increase in attacks
  • Internet service providers and managed service providers saw 67% more attacks
  • The communication sector experienced a 51% increase in attacks
  • Government and military organizations saw an increase of 47%

Some organizations specifically driving the growth of integrated risk management solutions and markets are found in sectors like banking, healthcare, and IT. sectors


Financial services have always demanded intentional, high-level security. Safeguarding accounts and assets for customers — whether the public or businesses — is critical to the services provided in the banking sector. However, this protection is becoming more complex and difficult to provide as services go increasingly digital. Banks and other financial institutions are turning to corporate best practices and risk management solutions to meet the challenge.



In 1996, the U.S. government passed the Health Insurance Portability and Accountability Act. HIPAA demanded processes that allowed patients to access their medical records appropriately and have the ability to “transport” them to other providers when switching doctors or working with care teams. The act is just one of the many rules and regulations governing how patient data must be handled and shoring up requirements for confidentiality.

Yet healthcare has the same challenges found in banking. Sensitive data is increasingly required across many channels, including inpatient portals and apps. As a result, organizations within the sector are spending on security and risk management solutions to help accomplish business and patient-facing goals while standing firm on data security.

Information Technology

The push for integrated risk management from the IT sector is two-prong. First, some companies offer technical solutions for other businesses, such as banking, healthcare, and retail apps that involve the use of confidential information. These companies drive demand for IRM solutions in the same way businesses in other industries do.

Second, some companies work to provide IRM services to others. These companies create products that solve common risk problems, increasing the amount and value of the solutions on the market.

Integrated risk management is a vast and growing field — one that’s essential to success across all sectors.