Supply Chain Risk Case Study

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Task 2 2.0 Supply Chain Risk Yiyi Fan and Mark Stevenson (2018) states that the risks in supply chain are the emergence of natural disasters or man-made problems. However, this can have an impact on the organisation’s operation and financial situation which may result to the closure of the business. 2.1 Risk According to Cline, Preston B (2015), risk is the potential of losing or gaining something of value. Values can be the, social status, emotional well-being, physical health or financial wealth which can be lost or gained while taking risk resulting from a given action or inaction, foreseen or unforeseen. Moreover, risk can be defined as the intentional interaction with uncertainty. According to Gregory Monahan (2008), risk is the achievement…show more content…
These natural calamities are not under the control of the organisation and this may result to the suspense of operation activities for some days or weeks. This delay can have some repercussions on the contractual agreed by both parties on the date of delivery. This late delivery may compel CNOI to pay to the Client a lump sum damages, at the time of receipt of the work. Obviously this may increase the expenses incurred by the organisation which culminate to a decrease in the profits. Furthermore, CNOI offers credit facilities to their customer and procrastinate their payments to CNOI may affect the cash flow. As there will be more money out that money in and if this persist, CNOI will have a huge amount of money with its debtors. In the long run, CNOI can face a shortfall of money. Moreover, due to the unexpected shortage of cash, this can delay the payment to its suppliers and this can be…show more content…
Applying risk management process tools to deal with risks and uncertainties caused by or impacting on logistics related activities or resources in the supply chain. Supply chain risk management is the interaction of two major fields that risk management and supply chain management. Figure 1 - The ISO 31000 standard in supply chain risk management by Ualison Rébula de Oliveira et al (2017) Effective supply-chain risk management (SCRM) is essential to a successful business. It is also a competence and capability many enterprises have yet to develop. According to Matotek Marija et al (2015:171), to develop a SCRM strategy we need to look at the following criteria:- 1. Risk Identification It is the process of finding, recognising and describing a risk 2. Risk Analysis It is the process to comprehend the nature of risk and to determine the level of risk 3. Risk Evaluation It is the process of comparing the results of risk analysis with risk criteria to determine whether the risk and/or its magnitude is acceptable or
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