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MANAGING RISK: Diversifying the Supply Chain (or hedging against political risk)?

Cargo containers with Chinese and United States flags reflecting trade war and restrictions in export and import

TSMC Plans to Build and Operate an Advanced Semiconductor Fab in Arizona (U.S.)

Are organizations starting to reduce geopolitical exposure by diversifying their supply chains? The TSMC announcement to build and operate a semiconductor facility in Arizona represents not only a multi-billion dollar investment but also potentially an enormous reduction in risk. The majority of TSMC fabs are located in a few small regions in Taiwan. These multi-billion fabs currently face significant earthquake and typhoon risk. However, political and pandemic exposure has been exponentially increasing in the region, and organizations are being forced to rethink their supply chain strategy and design. Businesses in Hong Kong face a similar growing threat as well (note: much of the system level testing occurs before being shipped to mainland China for assembly). Will businesses in these regions be the first to reconfigure their global supply chains with risk and performance simultaneously optimized? Stay tuned! I expect to see more organizations seek to diversify critical nodes in their supply chains (i.e., despite the headlines, I don’t believe we will see organizations immediately abandon geopolitical hot spots).

By Gary S Lynch

I am the Founder and CEO of The Risk Project, LLC a risk, uncertainty and opportunity advisory firm. As a management consultant, business developer and market analyst at Booz Allen Hamilton, Gartner Group and Marsh, I was responsible for defining market strategy, commericalizing capabilities, and developing businesses. I've helped dozens of organizations create new revenue streams. I've also held the position of Risk Executive, CISO and Global Leader - Office of Business Continuity at JPMorganChase, Prudential and Prudential Securities.

Throughout my career I worked with senior leadership from startups, academia and government agencies to life sciences, hi-tech and financial institutions. I was a founding member of the US Dept of Commerce's Advisory Committee on Supply Chain Competitiveness, Advisor to the WEF Global Risk Network and Sr. Research Fellow at the RH Smith School of Business, University of Maryland.

I've authored three business risk books and been a featured at the WEF, APEC, WCO, NIST, NACD, AIAG, RIMS, MIT CTL, Robert H. Smith School and the Desautels School of Management/McGill University.

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