Purpose - Catastrophic supply chain risks can have severe effects on companies’ supply chains. Still, previous supply chain risk management research has predominantly focused on operational
risks. The purpose of this study is to explore the construct of managerial risk perception and the assessment stage of catastrophic supply chain risks.
Design/methodology/approach - A risky decision making model for catastrophic supply chain risks was applied in an explorative multiple case study approach. Interviews served as the main
source for information.
Findings - The degree of supply chain integration was found to be a prime determinant of the potential damage caused by disruptions due to catastrophic supply chain risks. The frequency of catastrophic supply chain events seems to be influenced to some degree by the number of suppliers.
It is suggested that managerial perception of catastrophic supply chain risks is formed by the degree of potential damage and past exposure to catastrophic supply chain events. Several barriers to the assessment of catastrophic supply chain risks, such as missing top management priority, low supply chain risk management maturity and lack of obvious return were identified.
A combination of “softer” supply chain risk assessment methods, expert opinions and simulation techniques have been identified to be useful to assess catastrophic supply chain risks.
Originality/ value - This explorative research provides first insights into the construct of managerial risk perception in the context of catastrophic supply chain risks. Further it identifies useful risk assessment tools and techniques for catastrophic supply chain risks, based on both supply chain risk management research and catastrophe research.
Key words Supply chain risk management, risk assessment, catastrophic risks, low-probability high-consequence risks, risk perception, managerial risk perception.
Table of Contents
Chapter 1 – Introduction
1.1. Research motivation
1.2. Research goals
1.3. Academic and managerial contribution
1.4. Thesis outline
Chapter 2 – Literature review
2.1. Understanding risk
2.2. Supply chain risk management
2.3. Classification of SCRM research
2.3.1. Categorization of supply chain risk sources
2.3.2. The elements of the SCRM process
2.4. Catastrophic supply chain risks
2.5. A conceptual framework for supply chain risk analysis
2.5.1. The risk assessment stage
2.5.2. Managerial risk perception
Chapter 3 – Theoretical model
3.1. Risky decision making model
3.1.1. Supply chain risk conditions
3.1.2. Probability and magnitude of potential catastrophic supply chain events
3.1.3. Overall perception of catastrophic supply chain risks
3.1.4. Assessment of catastrophic supply chain risks
3.2. Research propositions
Chapter 4 – Methodology
4.1. Multiple case study approach
4.2 Literature review as a starting point
4.3. Data collection
4.4. Data analysis
4.5. Shaping prepositions and enfolding literature
4.6. Achieving case study rigor
Chapter 5 – Findings
5.1. Within-case results
5.1.1. Case Company A
5.1.2. Case Company B
5.1.3. Case Company C
5.1.4. Case Company D
5.1.5. Case Company E
5.1.5. Case Company F
5.1.6. Case Company G
5.2. Synopsis of findings – a cross-case display
5.2.1. Supply chain risk characteristics
5.2.2. Frequency and magnitude of past catastrophic supply chain events
5.3.3. Managerial perception of catastrophic supply chain risks
5.3.4. Assessment of catastrophic supply chain risks: procedures & barriers
Chapter 6 - Discussion
6.1. Supply chain risk levels
6.2. Formative elements of managerial risk perception
6.3. Effects of managerial risk perception
6.4. Barriers to a formal assessment of catastrophic supply chain risks
6.5. Methods and tools for the assessment of catastrophic supply chain risks
Chapter 7 - Conclusion
7.1. Summary of findings
7.2. Theoretical and managerial implications
7.3. Limitations and suggestions for future research
Research Objectives and Focus
This thesis explores the construct of managerial risk perception and the assessment stage of catastrophic supply chain risks through an explorative multiple case study approach, aiming to identify applicable tools and methods for evaluating these low-probability, high-consequence events.
- Managerial perception of catastrophic supply chain risks
- Assessment techniques for catastrophic supply chain events
- Barriers to formalizing supply chain risk assessment
- The impact of supply chain integration on risk exposure
Excerpt from the Book
2.4. Catastrophic supply chain risks
During the last decade numerous disasters around the world have occurred. Research has shown that in fact the risk of human and economic losses from natural disasters has grown tremendously within the last decade (Grace, Klein, Kleindorfer, & Murray, 2001). But supply chains are not only increasingly vulnerable because of the higher exposure to these events. The characteristics of modern supply chains add to this. Literature speaks of supply chains that are operated with less “slack”. Enormous efforts have been undertaken to reduce human and capital resources, in particular inventory. In addition, through global-spanning supply chains, locally occurring catastrophes have indirect effects worldwide (Knemeyer, et al., 2009; Pfohl, Köhler, & Thomas, 2010). Increased levels of risk are the consequence.
Supply chain disruptions through catastrophes have tremendous impact on companies’ performance. Ericsson lost over €400 million after a fire on one of their sub-supplier’s plant. Similarly, a fire at Toyota’s break supplier forced Toyota to stop its production and caused an estimated damage of $40 million per day. After an earthquake in Taiwan in 1999, Apple was not anymore able to fulfill some customer orders due to a supply shortage of microchips (Norrman & Jansson, 2004). In Europe, September 11 terrorist attacks lead to severe problems of the 3PL industry (Wagner & Bode, 2008). Hendricks and Singhal (2005) found that companies that experience supply chain disruptions have 33-40% lower stock returns in comparison to the industry benchmark. Additionally these disruptions can also mean a loss of reputation for the companies (Sodhi, et al., 2010).
Summary of Chapters
Chapter 1 – Introduction: This chapter introduces the vulnerability of modern supply chains to catastrophic, low-probability/high-consequence events and outlines the research motivation and goals of the study.
Chapter 2 – Literature review: This section reviews existing literature on supply chain risk management, focusing on defining catastrophic risks and the conceptual frameworks for risk analysis.
Chapter 3 – Theoretical model: This chapter adapts a risky decision-making model to investigate how supply chain conditions and managerial perceptions influence the assessment of catastrophic risks.
Chapter 4 – Methodology: The author describes the explorative multiple case study approach, covering data collection from seven firms and the methodology for intra-case and cross-case analysis.
Chapter 5 – Findings: This chapter presents the empirical results, detailing the specific risk profiles and assessment practices observed across seven companies.
Chapter 6 - Discussion: The findings are interpreted to examine the links between supply chain integration, managerial perception, and the identified barriers to formal risk assessment.
Chapter 7 - Conclusion: The study concludes by summarizing key findings regarding risk perception and identifying limitations and future research avenues.
Keywords
Supply chain risk management, risk assessment, catastrophic risks, low-probability high-consequence risks, risk perception, managerial risk perception, supply chain integration, vulnerability, case study, decision-making, supply chain disruption, mitigation, business continuity, risk mapping, disaster recovery.
Frequently Asked Questions
What is the core focus of this research?
The work focuses on the managerial perception and formal assessment of catastrophic supply chain risks—specifically low-probability, high-consequence events that are often neglected in traditional operational risk management.
What are the primary themes addressed?
The themes include the formative elements of managerial risk perception, the identification of suitable risk assessment tools, the influence of supply chain integration on risk, and organizational barriers to formal assessment.
What is the main goal or research question?
The goal is to explore how managers construct their perception of catastrophic risks and to identify which methods and tools are applicable for assessing these events within a supply chain context.
Which scientific methodology is employed?
The research uses an explorative multiple case study approach involving seven firms across various industries, utilizing semi-structured interviews and document analysis.
What is covered in the main body of the work?
The main body covers a comprehensive literature review, the development of a theoretical model based on risky decision-making, an empirical multi-case study, and a discussion of the findings in relation to existing research.
Which keywords characterize this thesis?
Key terms include Supply chain risk management, catastrophic risks, managerial risk perception, LP-HC risks, and supply chain integration.
Why is the "Post-Bhopal" phenomenon mentioned in the study?
The author uses this to explain that catastrophic events often trigger a fundamental shift in risk perception and organizational action only after an accident has occurred, rather than through proactive modeling.
What role does supply chain integration play in these risks?
The study finds that higher levels of integration can significantly increase the potential damage of a disruption, as rippling effects from a catastrophe are amplified through tightly linked processes.
Why do most companies not formally assess catastrophic risks?
Common barriers identified include a lack of resources, the perception that such events are too unlikely to justify investment, and the difficulty in obtaining reliable data for financial cost-benefit analysis.
- Quote paper
- Simon Barth (Author), 2010, Managerial perception and assessment of catastrophic supply chain risks, Munich, GRIN Verlag, https://www.grin.com/document/164613
