Automotive Business Magazine – Q3 2026 – Digital edition - Flipbook - Page 44
OPI N I O N
R E TA I L
The evolution of
risk management
→ David Weeks is director, supply chain risk management solutions at Moody’s
M
anufacturers are rapidly
working to secure the
aluminum they need as
conflict disrupts supplies
and prices in the US are
raised. This is not the
first time. In September
2025, a fire broke out at
North America’s largest
rolled aluminum plant. Ford, Stellantis
and others halted production of key
models. The company announced in
May 2026 that production would finally
resume, but not without taking a $1.7bn
dollar hit to its cashflow.
Multi-faceted risk
Problems in automotive supply chains
may be caused by various issues,
including: cyberattacks; the changing
financial health of suppliers; the
availability of rare earths, chips or other
components; the need for regulatory
compliance; and interruptions to
production because of extreme weather
or energy outages. Vast demand from
data centers is raising prices for some
components and resources, reducing the
availability of previously stable supplies
for the automotive industry.
In a Moody’s survey of 50 C-suite
executives across EMEA, the Americas,
and APAC in various industries, 41
said exposure to operational risk had
increased in recent years, and 46 said
cyber risk had grown.
As vehicles become more connected
and the industry relies on global,
multi-tiered networks of suppliers,
vulnerabilities in digital infrastructure
have multiplied. A defect in a single
component may affect how systems
interact across vehicles, regions, or
model years, widening potential recall
scope. Park outs can also occur, as a
single component delayed can prevent
the models from being fully assembled.
Cyberattacks targeting suppliers,
systems, and third-party software can
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AUTOMOTIVE BUSINESS Q3 2026
ripple across the supply chain, disrupting
operations and jeopardising IP.
When conditions in one part change,
the consequences may travel fast and
wide. Tariffs affect supplier costs, which
may in turn influence financial resilience,
delivery reliability, and quality or recall
exposure. Assessing risk across every tier
of the supply chain can play an important
role in supporting business continuity.
Companies increasingly deploy
early-warning systems and predictive
analytics that combine multiple types of
information. These may include:
Financial indicators: liquidity ratios,
leverage, liens, lawsuits.
Operational signals: quality issues,
missed deadlines, freight incidents.
Compliance alerts: regulatory findings,
safety campaigns, negative media.
Recognising that risks are
interconnected can support more
effective supply chain management.
By assessing risks collectively,
traditional barriers that separate
production, finance, regulatory, and
other disciplines may be overcome.
Adopting a more unified approach to risk
management can help managers analyse
interconnected risks in real time, plan
scenarios, and make timely decisions.
This often depends on consistent, upto-date data alongside robust analytical
processes. Gathering and monitoring
all the relevant information – financial
reports, credit ratings, ownership
changes, geopolitics, natural disasters,
taxes, cyber security measures, adverse
media, and other data – may take a lot of
time if done manually. Luckily, datasets
can be interrogated using advanced
analytics. Thanks to AI, some tasks that
used to take days may be carried out
in minutes. Proactive detection helps
with early resource planning, tooling
adjustments, and supplier support,
reducing the likelihood that minor issues
escalate into line-stops or recalls.
