A recent conversation I had with Mary Rhodes, leader of D&B's Supply Management Solutions business, focused on the importance of managing the risks associated with big strategic sourcing decisions. This put me in mind of a different conversation I had back in 1998 with John Ennis, a Chicago-based risk management expert.

Ennis called me up to talk about "integrated" or "holistic" risk management. He predicted that Chief Purchasing Officers would soon find themselves reporting to a new breed of C-level executives: Chief Risk Officers or CROs. The CRO, Ennis said, would take a portfolio (a diversified, zero-sum) approach to managing his or her company's entire spectrum of risk exposures be they financial, currency, property, casualty, materials price or supply. The holistic viewpoint, he said, would also expand a company's comprehension of its risks to encompass the entire supply chain, treating, for example, critical suppliers' currency risk exposures as its own risk exposures.

While Ennis' sweeping prediction about CROs has yet to come true, this kind of thinking has never been more important than it is today. The point is underscored in two stories we are featuring in this issue.

• Jim Carbone's story, starting on page 35, looks at the incredible pressure on sourcing execs in high-tech industries to bet correctly on what will be the next hot region in the world for high-quality, low-cost electronic components and manufacturing services or risk being shut out when it comes to securing sufficient supplier capacity in those regions.
• Our cover story, meantime, takes us inside the supply management organization at Honeywell's Industry Solutions (IS) business. The division learned some hard lessons about supply risk when the outsourcing of its printed circuit board assembly caused it to lose influence with second-tier component suppliers in tightly supplied markets as well as access to information about how those component suppliers are performing over time, creating new risks for its manufacturing and product design organizations.

Today, Honeywell IS is wielding risk management's most important weapon: information. It's driving its decision making to a fact-based model, which is the only possible starting point for holistic risk management. If you want to learn more, see "Companies integrate risk management" in our July 16, 1998 issue. If you want to see how Hewlett-Packard is already applying the concept in supply management, check out our February 21, 2002 issue. Both are in the archives at www.purchasing.com.