When I was a purchaser with my previous company, there was this big Taiwan supplier that won my respect.
This supplier was reliable, makes good quality products, and their prices were competitive. So it was no surprise that many purchasing teams often compete with each other to source our products from this Taiwan supplier.
However, as part of their risk management, this Taiwan supplier will only offer us max 30% of their production capacity. Yup, its one of the few suppliers who will turn us away!?
Every time I visit this supplier, I have to turn myself into a "salesman" to convince this supplier to do more of our business! Talk about role reversal!
On the other extreme end, there are suppliers who have no qualms in giving us 90% of their production capacities. I felt like a king visiting these suppliers...
Guess who survived better during the 2000-2003 global recession?
Those who buy 4D may have this frustrating experience of being told your number is "sold-out"...
Have you wondered why Singapore Pools is turning away business?
It's risk management like the Taiwan supplier right?
Using the same analogy, those who trade spot forex will understand why some spot forex brokers have to be liquidated while some are able to weather the EUR/CHF storm without bodily harm to their reputation?
Those brokers that failed only practiced Loss Management - making sure clients have enough margin to support their trades.
But were there Risk Management to make sure the brokerage is not taking too big a position risk by accepting all the same number "4D" bets by clients?
And that's why I give people a queer look when they tell me they are well diversified with 100 stock positions - fully vested,
Singapore Man of Leisure (welcome to my blog; just google it!)
