In part 1 we explained why small and medium businesses or SMEs needed risk analytics. In part 2 we described a few common risk related issues that affect SMEs. In this concluding part, we will describe a very basic scenario that relates to the twin problems of capacity utilization and demand uncertainty.

Frank Buytendiyk in his wide ranging article here makes an argument for

The venerable World Economic Forum recently published their 5th annual "Global Risks" report. While clearly this is a very timely analysis, we see a few problems with their report.

In a recent survey conducted by GXS - an e-commerce and B2B integration services company, 84% of more than 800 respondents from the logistics industry said that they expect supply chain complexity to increase in the next three years. Furthermore experts who ran the survey indicated that the leaders will be the ones who can "master and manage this complexity".

Traditional risk analysis involves developing what are known as "ordinal scoring" scales. For example, this requires getting executives to answer questions like "what is the likelihood that the next major database upgrade will be delayed", "what is the impact of the hurricane season on the availability of medicines for our troops" etc.

There are apparently many different definitions of risk as there are practicing groups. But most definitions involve computing some form of probability of an event. Doug Hubbard in his book "Failure of Risk Management" makes a very convincing argument for standardizing the definition by invoking the difference between Risk and Uncertainty.