The article discusses the importance of managing supply-chain risks to avoid disruptions and maintain business continuity. It highlights a case where a fire at a Philips Electronics plant in Albuquerque, New Mexico, led to a significant production disruption for Nokia, a major customer, due to its multiple-supplier strategy. In contrast, Ericsson, another customer, suffered severe financial losses due to its single-sourcing policy. The article emphasizes that supply-chain risks can arise from various sources, including natural disasters, labor disputes, supplier bankruptcy, and acts of war or terrorism. These risks can cause delays, disruptions, forecast inaccuracies, systems breakdowns, intellectual property breaches, procurement failures, inventory problems, and capacity issues. To mitigate these risks, companies must understand the nature and drivers of supply-chain risks and develop effective mitigation strategies. Leading companies like Dell, Toyota, and Motorola excel at identifying risks and creating robust strategies to neutralize negative effects. The article suggests that managers should perform stress testing to identify and prioritize risks, and tailor risk management approaches based on the specific circumstances of their company. Key strategies include maintaining excess inventory, flexible capacity, redundant suppliers, and responsive production and delivery capabilities. Additionally, companies should consider the trade-offs between risk reduction and reserve costs, and balance these with the level of risk and product characteristics. By continuously stress testing their supply chains and tailoring reserves, managers can protect and improve their business performance in the face of various supply-chain risks.The article discusses the importance of managing supply-chain risks to avoid disruptions and maintain business continuity. It highlights a case where a fire at a Philips Electronics plant in Albuquerque, New Mexico, led to a significant production disruption for Nokia, a major customer, due to its multiple-supplier strategy. In contrast, Ericsson, another customer, suffered severe financial losses due to its single-sourcing policy. The article emphasizes that supply-chain risks can arise from various sources, including natural disasters, labor disputes, supplier bankruptcy, and acts of war or terrorism. These risks can cause delays, disruptions, forecast inaccuracies, systems breakdowns, intellectual property breaches, procurement failures, inventory problems, and capacity issues. To mitigate these risks, companies must understand the nature and drivers of supply-chain risks and develop effective mitigation strategies. Leading companies like Dell, Toyota, and Motorola excel at identifying risks and creating robust strategies to neutralize negative effects. The article suggests that managers should perform stress testing to identify and prioritize risks, and tailor risk management approaches based on the specific circumstances of their company. Key strategies include maintaining excess inventory, flexible capacity, redundant suppliers, and responsive production and delivery capabilities. Additionally, companies should consider the trade-offs between risk reduction and reserve costs, and balance these with the level of risk and product characteristics. By continuously stress testing their supply chains and tailoring reserves, managers can protect and improve their business performance in the face of various supply-chain risks.