Recent events around the world have highlighted the critical—and sometimes delicate—nature of the supply chains many companies rely upon to produce their products and deliver them to customers.

The earthquake and resulting tsunami that hit Japan in March, the Icelandic volcano eruption that disrupted air travel to and from Europe in 2010, this year's “Arab Spring” political upheavals and decisions in China to restrict the export of rare earth minerals all have risen as potential or real supply threats to businesses' supply chains over the past year.

And with companies' operations increasingly centered on just-in-time inventory strategies and outsourcing the manufacturing of product components, along with the rise of online communications and advances in worldwide delivery, supply chain risks aren't just the province of large businesses today, with even smaller companies tied into far-flung vendor networks or distribution systems.

Complicating things further, frequently the exposure doesn't end at a company's supplier but may well extend further down the chain to suppliers of the supplier.

And the disruption might not come from not being able to get the product for which a company has contracted, but rather from discovering that that product is not to the anticipated standards, as in recent cases that have resulted in massive recalls of pet food and toys painted with lead-based paints.

When supply chain disruptions do occur, insurance coverage issues can be complex, as will no doubt prove to be the case going forward as businesses and their insurers try to sort out claims resulting from the Japan's March earthquake and tsunami. Supply chain losses stemming from disruption of the business of suppliers of Japanese suppliers or from damage to transportation networks in Japan will likely prove challenging for many seeking coverage for supply chain interruptions caused by the Japanese earthquake, some experts say.

And, as might be the case in many far-reaching supply chains, physical distance and language differences will likely prove a further challenge in evaluating supply chain claims related to the Japanese earthquake.

As companies have become increasingly aware of the exposures presented by their supply chains, many of them have come to realize that addressing the exposure is a classic risk management exercise involving identifying the exposures, mitigating them where possible, transferring risk when needed and continually monitoring the risk management process to insure it's functioning as needed and to make adjustments as necessary.

For some risk managers, the task of identifying and monitoring supply chain risks means racking up frequent-flyer miles, traveling to the site of the exposure to identify the risks properly and ensure that they're managed effectively.

It also can mean evaluating the local risk climate before a company makes a decision on where to deploy capital, where to expand its business or markets it might consider as possible sources for components or raw materials.

Often, the effort to manage supply chain risks must by necessity be approached on an enterprise-wide basis. For risk managers, it can be an opportunity to take the lead in that process, guiding the effort to look across the various aspects of an organization as it seeks to identify areas of the business in which supply chain risks might reside.

The diverse articles and resources presented in this Solution Arc will examine issues associated with supply chain risk, along with ways companies are addressing those exposures and how they ensure that those efforts remain effective over time.