Risk Management in Textile and Fashion Industry

Risk Management in Textile and Fashion Industry

Shubham Anil Jain
Aditya Birla Fashion and Retail Limited
Bangalore, India
Email: shubhamajain125@gmail.com


One of the oldest industries in the world is textile production. Because the majority of businesses cater to the worldwide garment, fashion and textile market, it’s also one of the most international sectors. However, the dynamic global environment has altered consumer tastes, increased cost volatility, and introduced fresh hazards to the environment. Risk management in the textile and fashion industry involves identifying, assessing, and mitigating potential risks that can impact the business operations and objectives. The necessity of risk management in the textile and fashion industry cannot be emphasized given the ferociously uncertain nature of the year 2020. Nowadays, networks with the highest resilience are prioritized by businesses.

Risk Management in Textile industry

Types of Risks in Textile and Fashion Industry:

1. External risks:
In a supply chain, exposure to external hazards can happen both upstream and downstream and is influenced by market, environmental, and business factors.

2. Supply risks:
Lack of access to the materials needed for production results in supply risks. Supply outages can cause delays and strained relationships with customers

3. Demand risks:
Demand risks are related to underestimating the market’s attraction to your offerings. They may result from a lack of understanding of consumer trends or unexpected shifts in the demand environment.

4. Environmental risks:
When your supply chain is negatively impacted by economic, political, ecological, or social variables, this is referred to as an environmental risk. The China-US trade conflict and the COVID-19 pandemic are two notable examples.

5. Internal risks:
As contrast to external dangers, are mostly under your control. By doing an audit of your workflows, communications, planning, and processes to see what is working and what may be improved, you can find them.

6. Manufacturing risks:
Any potential disruption to your production or process is a manufacturing risk. They can result from unhealthy or broken machinery, overworked labour, insufficient production management, and many other things.

7. Business risk:
Internal business risks are those that relate to adjustments that inevitably impact how you communicate with your stakeholders and business partners. Examples include changing up your management team’s key players or implementing new customer communications guidelines.‍

8. Planning and control risks:
It might result in the purchase of unneeded equipment or the loss of productive inputs due to a poor or inaccurate appraisal of your company’s demands.

Risk Management in Textile and Fashion Industry:

a) You can move on to management after analyzing and comprehending the variety of hazards that your business faces. The risk management strategy you’ll employ depends on how likely it is for a certain danger to materialize and how severe its consequences will be.

b) For instance, you can decide to keep or accept low-priority industry risks. On the other side, you must take steps to lessen the risk’s likelihood of happening or completely avoid it. It’s also beneficial to concentrate on actions that lessen the consequences if the danger materializes.

c) Reliable action and reference guides can be found in diligent record-keeping of all risk management processes and policies. You’ll probably encounter poor documentation, which can lead to protocol ambiguities that impair risk management effectiveness.

d) Use ethical business practices as a requirement – Create policies that outline your organization’s dedication to conducting business in a manner that respects both the environment and human rights.

e) Create a responsible sourcing strategy. Create a strategy that ranks operations according to risk. It can be helpful to identify and priorities focus areas if you rank the hazards according to likelihood and severity.

f) Work together with your suppliers to find solutions to issues – After identifying risks in your organization, collaborate with all stakeholders to investigate all options and overcome obstacles. The systemic problems you’re experiencing won’t likely be resolved by terminating a contract.

g) Make supply chain visibility a top priority. Gather data about your suppliers along the whole supply chain. By doing this, you’ll be able to identify the weaker employees and take their needs into account. Reciprocity, for instance, will help you stay ahead of the continuously changing threats by enhancing visibility across your entire organization to better reduce business exposure and manage risks.

h) It’s critical to distinguish between supply chain risk management and excessively defensive risk mitigation because the latter might impede development. You run the risk of limiting innovation, which could be detrimental to your ability to expand, if you completely ban taking calculated risks.

i) The development of technology has expanded the range of risk management options and can guarantee that you have the knowledge required to take these crucial calculated risks.

j) An effective supply chain risk map will segment the components that require management, which is best accomplished by creating a framework. The so-called PPRR model, one of the most popular for controlling supply chain risk, is based on four pillars:‍

  1. Implementing strategies to reduce or stop possible supply chain hazards from happening is what is meant by prevention.
  2. Preparedness entails creating a backup plan in case the supply chain is disrupted. This is also known as being “risk ready.”‍
  3. Response is about carrying out your backup plan to lessen the effects should an interruption occur. In order to avoid confusion about roles when it’s time to take action, this calls for excellent communication amongst the people concerned.
  4. Recovery entails taking the necessary actions to restore business as soon and effectively as possible. This might involve anything from wise resource allocation to finding alternative producers for production inputs.

Organizations in the textile industry face a variety of business risks as a result of the current business climate. These risks may include supply chain disruptions, market volatility, quality control issues, environmental regulations, and safety hazards. These vary in complexity and likelihood of occurrence, but a thorough risk management plan can guide you through the choppy waters. It will be simpler if you have a trustworthy risk management company on your side.


  1. https://www.fibre2fashion.com/industry-article/8980/a-guide-to-supply-chain-risk-for-the-apparel-industry
  2. https://ordnur.com/textile/managing-risk-in-the-textile-industry/
  3. https://www.linkedin.com/pulse/fashion-risk-management-sumit-wadhawan
  4. https://www.sciencedirect.com/science/article/pii/S2351978915011701
  5. https://www.emerald.com/insight/content/doi/10.1108/IJRDM-04-2017-0092/full/html

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1 thought on “Risk Management in Textile and Fashion Industry”

  1. My name is Arthur

    I’m very impressed with the topic. I have benefited a lot. Hoping to be learning more and more from you.
    My question is on how can we get best team with best skills in a textile industry like for a new shop.?


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