Risk Assessment In Risk Management

Risk Assessment- After identifying all the possible risks, companies should assess all the risk according to their probabilities in order to prioritize them. According to, a risk assessment must be conducted in a broad circle and apart main suppliers, the evaluation process should include suppliers’ suppliers too . According to the author, several tools or methods might be required in order to obtain visibility of the whole supply chain. One of the most commonly used methods is Risk Map, which allocates the possible supply chain risk according to their occurrence frequency and impact on the supply chain. In the practice and theory, there are several Risk Maps are available such as 3 to 3, 4 to 4, 5 to 5 and, etc. Example to the 5 to 5 Risk

Blackhurst et al. (2008) identified four main purposes of risk monitoring which are:

• Systematic tracking of determined risk

• Identify new risk

• Managing contingency reserves effectively

• Apprehend lessons learned for further risk assessment and assignment efforts

Because of the dynamic and changing nature of the risk and risk management strategies, Blackhurst (2008) highlights that risk monitoring should be continuously conducted .

According to Christopher et al. (2011), two types of monitoring techniques are used which are periodic and regular. Periodic monitoring assesses company’s repeated task and plans. Regular monitoring is essential in order to respond to the risks that its impact has a higher value than anticipated value .

2.2.2 Proactive approaches (supply chain based)

Some of the researchers claim that, catastrophic events affects not only the company itself, but also its supplier, customer, and network, the mitigation strategies should encompass the whole supply chain . Therefore, three commonly used mitigation strategies have been discussed which comprises the entire supply chain from supply, demand, and information

Facility and supplier locations play a crucial role in safety. Potential risk related to the geographical regions should be considered, since some places have a high frequency of disaster compared to others. As with its suppliers, companies should collaborate with its buyers as well. Under better coordination, products can be designed and changed easily which provides better solutions for solving demand mismatches .

Information based strategies- The essential element in any supply chain mitigation strategies is to provide transparent information sharing among supply chain members. The accuracy and accessibility of the information are also important in order to reduce the uncertainty in the supply chain. Incorrect information can lead to supply-demand mismatch. The advanced warning system is another crucial element to mitigate disruption while it can provide valuable time for preparation towards disruption. The purpose of prior identification of any catastrophe is to minimize the life and property loss