A recent article in Forbes called big data a “smoke detector” for risk. So, what do the most successful risk takers in business understand about the benefits of big data? Check this out...
Natural disasters might sound like risks that only property insurance companies have to worry about. But fires, floods, tsunamis, tornadoes and other natural disasters can create huge supply chain issues as well. These challenges can play havoc on major retailers, but they can also hurt small, locally owned and sourced businesses too.
Of course, supply chain problems are not limited to natural disasters. Shortages, market shifts, and other factors can make necessary raw materials and finished items tough to get and impossible to stock. When that happens, it creates a chain of unfortunate events and business challenges, no matter the size of your organization is.
Until the advent of big data analysis, business owners were essentially forced to depend on what amounts to educated guesses when trying to assess business risks tied to supply chain interruption. You could buy insurance for business loss, but that didn’t guarantee you would get the business back after the problem ended.
So how does big data factor into the picture? Currently, data scientists can analyze historical data to help them create more accurate “risk maps” that assists them with planning for potential supply chain problems. But big data can also connect that historical data with real-time risk maps to allow owners to make the best possible decisions with the most accurate available data right now … rather than waiting for more questions to be answered or being forced to just decide and hope for the best.
Factors being considered include everything from how the supplier performed in the past (administrative or organization patterns) to how the supply routes have been impacted by issues in the past (trends and weather patterns). They also include when and how a business has dealt with similar issues. This analysis can not only help an owner see what worked and what didn’t but can also predict later challenges and offer information to help the owner choose better options. Would a different route be more cost effective? Would a different supplier reduce risk or increase it?
The best benefit, though, is in the timing. While risk used to be something that had to be periodically assessed, it often yielded outdated data by the time it was actionable and implemented. Today big data analysis allows these decisions to be more or less constant. Instead of waiting four to six months to “see how things are working” business can look at all the factors in what passes for real time.
Of course, risk is not all about supply chain demands and business infrastructure. Sometimes risk is all in the public’s relationship with your brand. You may have the best internal structure for making a product and getting it to market, but that won’t help you if, suddenly, your target market hates you.
Public relations nightmare can derail even the most shipshape companies, leading to levels of risk that can have much worse consequences than a few internal supply chain snafus.
One of the best ways to deal with a PR problem is to keep it from happening. In addition to advice and counsel from a reputable PR agency, knowing ahead of time when there is going to be a problem or event with a potential issue helps you prepare for it before a crisis even happens.
That sort of predictive ability is possible with big data. You can then take those concerns to your PR team and work with them to build a brand protective response before you lose control of the narrative.
Roman Temkin is a leading New York Real Estate developer.
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