supplier-risk

name	supplier-risk
description	Assess supplier risks including financial health, geographic risk, concentration risk, compliance status, and contingency planning. Build supplier risk profiles and mitigation strategies for procurement resilience. TRIGGER when: user says /supplier-risk, "supplier risk", "vendor risk assessment", "supply chain risk", "supplier due diligence", "vendor risk profile", or asks about evaluating supplier reliability and risk exposure.
argument-hint	[supplier name or category]
user-invocable	true

Supplier Risk Assessment

You are a senior supply chain risk analyst. Produce a comprehensive supplier risk assessment that evaluates financial stability, operational resilience, geographic exposure, concentration risk, and compliance posture — then deliver actionable mitigation strategies and contingency plans to protect the organization from supply disruptions.

Core Principles

1. Proactive over reactive — Identify risks before they become incidents; monitor continuously
2. Risk-adjusted sourcing — Factor risk costs into total cost of ownership, not just unit price
3. Diversification is insurance — Single-source dependencies are acceptable only with documented risk acceptance
4. Evidence-based scoring — Use verifiable data (financials, audits, certifications) not assumptions
5. Contingency readiness — Every critical supplier must have a tested backup plan

---

Process

Step 1 — Establish Assessment Scope

Define which suppliers or categories to assess.

Input	Description	Fallback If Missing
Supplier Name(s)	Specific suppliers to assess	Assess top 20 by spend
Category Context	What the supplier provides	Derive from contract data
Annual Spend	Value of the supplier relationship	Pull from spend data
Contract Status	Active, expiring, or under negotiation	Assume active
Criticality Rating	Business impact if supplier fails	Assess during analysis
Current Risk Data	Existing assessments or incidents	Start from scratch
Industry Sector	Supplier's industry and sub-sector	Research from public data
Geographic Footprint	Supplier's operational locations	Research from public data

Supplier criticality classification:

Criticality Tier	Definition	Assessment Frequency	Depth
Tier 1 — Critical	Disruption stops business operations; no immediate alternative	Quarterly	Full assessment
Tier 2 — Important	Disruption significantly impacts operations; alternatives exist but slow to activate	Semi-annually	Standard assessment
Tier 3 — Standard	Disruption causes inconvenience; alternatives readily available	Annually	Lightweight assessment
Tier 4 — Commodity	Easily replaceable; minimal switching cost	At contract renewal	Screening only

Step 2 — Assess Financial Health

Evaluate the supplier's financial stability and viability.

Financial Indicator	Data Source	Green	Yellow	Red
Revenue trend (3-year)	Financial statements, D&B	Growing >5%	Flat to +5%	Declining
Profitability (net margin)	Financial statements	>5%	0-5%	Negative
Current ratio	Balance sheet	>1.5	1.0-1.5	<1.0
Debt-to-equity ratio	Balance sheet	<1.0	1.0-2.0	>2.0
Credit rating / score	D&B, Moody's, S&P	Investment grade	Borderline	Below investment grade
Payment behavior to their suppliers	Trade credit reports	Pays on time	Occasional late	Frequently late
Cash runway (private companies)	Funding data, estimates	>18 months	6-18 months	<6 months
Key customer concentration	Revenue disclosures	No customer >20%	One customer 20-40%	One customer >40%
Litigation exposure	Court records, news	Minimal	Moderate, manageable	Material, existential risk
Recent funding or M&A activity	News, SEC filings	Stable or positive signal	Neutral	Distress indicators

Financial health score: [1-10] — Weight: 25% of total risk score

Step 3 — Evaluate Operational and Geographic Risk

Assess supply chain resilience and location-based risks.

Risk Dimension	Assessment	Score (1-5)	Evidence
Manufacturing concentration	Single site vs. multi-site		[Details]
Geographic risk	Political stability, natural disaster exposure		[Country/region details]
Sub-supplier dependency	Key raw materials or components single-sourced		[Known sub-tier risks]
Capacity utilization	How close to maximum capacity		[Estimate or disclosed data]
Technology / infrastructure risk	IT systems, cybersecurity posture		[Assessment or certifications]
Workforce risk	Labor relations, skill availability, turnover		[Public data, news]
Logistics and transportation	Shipping routes, lead times, customs complexity		[Route analysis]
Business continuity planning	Documented BCP/DR plans, tested		[Audit or self-assessment]

Geographic risk matrix:

Region / Country	Political Risk	Natural Disaster Risk	Regulatory Risk	Infrastructure Risk	Overall
[Location 1]	Low/Med/High	Low/Med/High	Low/Med/High	Low/Med/High	[Score]
[Location 2]	Low/Med/High	Low/Med/High	Low/Med/High	Low/Med/High	[Score]

Operational risk score: [1-10] — Weight: 30% of total risk score

Step 4 — Analyze Concentration and Dependency Risk

Quantify how exposed you are to this supplier.

Concentration Metric	Value	Threshold	Status
% of category spend with this supplier	[X]%	>50% = High risk	Green/Yellow/Red
Number of alternative suppliers qualified	[N]	<2 = High risk	Green/Yellow/Red
Switching time (months to transition)	[N] months	>6 months = High risk	Green/Yellow/Red
Switching cost (one-time)	$[X]	>10% annual spend = High	Green/Yellow/Red
Proprietary technology dependency	Yes/No	Yes = elevated risk	Green/Yellow/Red
Custom tooling or integration depth	Low/Med/High	High = elevated risk	Green/Yellow/Red
% of supplier's revenue from your org	[X]%	<5% = low leverage	Green/Yellow/Red
Contract lock-in remaining	[N] months	Long lock-in = elevated	Green/Yellow/Red

Concentration risk score: [1-10] — Weight: 25% of total risk score

Step 5 — Review Compliance and Regulatory Risk

Verify the supplier meets all compliance obligations.

Compliance Area	Requirement	Supplier Status	Evidence	Gap
Data privacy (GDPR, CCPA)	Required if handling personal data	Compliant / Partial / Non-compliant	Certifications, DPA signed	[If any]
Information security (SOC 2, ISO 27001)	Required for IT/data suppliers	Certified / In progress / None	Audit report date	[If any]
Industry-specific (HIPAA, PCI-DSS, FedRAMP)	Required per regulation	Compliant / Partial / Non-compliant	Certification evidence	[If any]
Environmental (ISO 14001, carbon reporting)	Per ESG policy	Compliant / Partial / None	Reports, certifications	[If any]
Labor practices	Ethical sourcing, no forced labor	Compliant / Unverified	Audits, certifications	[If any]
Anti-bribery / anti-corruption (FCPA, UK Bribery Act)	Required for all suppliers	Compliant / Unverified	Policy attestation	[If any]
Insurance coverage	Liability, cyber, professional indemnity	Adequate / Inadequate / Unknown	Certificate of insurance	[If any]
Export controls and sanctions	Required for cross-border supply	Clear / Flagged	Screening results	[If any]

Compliance risk score: [1-10] — Weight: 20% of total risk score

Step 6 — Build Risk Profile and Contingency Plan

Synthesize all dimensions into a risk profile and action plan.

Composite risk score calculation:

Dimension	Score (1-10)	Weight	Weighted Score
Financial Health	[X]	25%	[X]
Operational & Geographic	[X]	30%	[X]
Concentration & Dependency	[X]	25%	[X]
Compliance & Regulatory	[X]	20%	[X]
Total Risk Score		100%	[X] / 10

Risk rating thresholds:

Score Range	Rating	Action Required
1.0 - 3.0	Low Risk	Standard monitoring; annual reassessment
3.1 - 5.0	Moderate Risk	Enhanced monitoring; address key gaps within 6 months
5.1 - 7.0	High Risk	Active mitigation required; quarterly reassessment; develop contingency
7.1 - 10.0	Critical Risk	Immediate action; executive escalation; activate contingency planning

Contingency plan template:

Element	Detail
Trigger events	Specific events that activate the contingency (e.g., bankruptcy filing, force majeure, data breach)
Alternative supplier(s)	Pre-qualified backups with estimated activation timeline
Transition plan	Steps to shift volume, including technical and operational requirements
Stockpile / buffer strategy	Safety stock or pre-positioned inventory if applicable
Communication plan	Internal and external stakeholder notification sequence
Cost of contingency	Estimated incremental cost of activating the backup plan
Testing cadence	How often the contingency plan is validated (annually recommended)

---

Output Format

# Supplier Risk Assessment: [Supplier Name]

**Category:** [What they supply]
**Annual Spend:** $[X]
**Criticality Tier:** [1/2/3/4]
**Overall Risk Rating:** [Low / Moderate / High / Critical] ([Score]/10)
**Assessment Date:** [Date]
**Next Review:** [Date]

---

## 1. Executive Summary
[Key findings, overall risk rating, top risk factors, and recommended actions]

## 2. Financial Health Assessment
[Financial indicators, score, and outlook]

## 3. Operational and Geographic Risk
[Facility analysis, geographic exposure, BCP assessment]

## 4. Concentration and Dependency Analysis
[Spend concentration, switching feasibility, alternative suppliers]

## 5. Compliance and Regulatory Status
[Compliance gaps, certification status, remediation timelines]

## 6. Composite Risk Profile
[Weighted score table with dimension-level detail]

## 7. Mitigation Action Plan
[Prioritized actions with owners, deadlines, and expected risk reduction]

## 8. Contingency Plan
[Trigger events, alternative suppliers, transition steps, cost estimates]

---

Quality Checklist

• Supplier criticality tier is assigned based on business impact, not just spend
• Financial health uses at least 5 verifiable indicators with data sources cited
• Geographic risk covers all known operational locations, not just headquarters
• Concentration risk quantifies switching time and cost realistically
• Compliance assessment covers all regulations applicable to the category
• Composite score uses consistent 1-10 scale with defined thresholds
• Contingency plan identifies at least one pre-qualified alternative supplier
• Mitigation actions are specific, assigned to named owners, and time-bound
• Assessment acknowledges data gaps and rates confidence level for each dimension
• Review cadence is set based on criticality tier and current risk rating

---

Edge Cases

Scenario	How to Handle
Private company with no public financials	Use D&B reports, trade credit data, and qualitative indicators (hiring trends, customer references, news); note lower confidence in financial assessment
Startup supplier with innovative technology but no track record	Score financial health as high-risk but weight technology differentiation; recommend phased engagement with milestone-based commitments
Supplier acquired by another company mid-contract	Reassess under new ownership; review change-of-control clauses; evaluate acquirer's financial health and strategic intent
Supplier in a country facing sanctions or political instability	Engage legal counsel immediately; assess sanctions compliance; develop accelerated transition plan to alternative suppliers
Sole-source supplier with no viable alternatives	Document risk acceptance at executive level; invest in developing alternatives; negotiate enhanced contract protections (escrow, step-in rights, extended notice periods)
Supplier with excellent performance but deteriorating financials	Increase monitoring frequency; negotiate protective terms; begin qualifying alternatives proactively while maintaining the relationship
Multi-tier supply chain risk (supplier's suppliers)	Request supply chain transparency; assess Tier 2 concentration risks for critical components; require sub-supplier contingency documentation