A review of enterprise risk management in supply chain David L. Olson Department of Management, University of Nebraska, Lincoln, Nebraska, USA, and Desheng Dash Wu RiskLab, University of Toronto, Toronto, Canada Abstract Purpose – The purpose of this paper is to review published approaches to supply chain risk management, to include identification and classification of types of risks, cases, and models. Specific aspects of risk in supply chains involving China are also addressed. Design/methodology/approach – Literature review provides sources which are synthesized. Findings – A generic framework is identified, then categorizations of supply chain risks are compared. Cases and models applied to the study of supply chain risk are reviewed briefly. A review of Chinese risk in the supply chain context is provided. Originality/value – This review includes many current studies, and is a source of useful references for those examining supply chain risk. Keywords Cybernetics, Risk management, Supply chain management, China Paper type Literature review 1. Introduction All human endeavors involve uncertainty and risk. Mitroff and Alpaslan (2003) categorized emergencies and crises into three categories: natural disasters, malicious activities, and systemic failures of human systems. Nature does many things to us, disrupting our best-laid plans and undoing much of what humans have constructed. Malicious acts are intentional on the part of fellow humans who are either excessively competitive or who suffer from character flaws. The third category is probably the most common source of crises: unexpected consequences arising from overly complex systems (Perrow, 1984). Examples of such crises include Three Mile Island in Pennsylvania in 1979 and Chernobyl in 1986 within the nuclear power field, the chemical disaster in Bhopal India in 1984, the Exxon Valdez oil spill in 1989, the Ford-Firestone tire crisis in 2000, and the Columbia space shuttle explosion in 2003. The financial world is not immune to systemic failure, as demonstrated by Barings Bank collapse in 1995, the failure of Long-Term Capital Management in 1998, and the sub-prime mortgage bubble implosion leading to near-failure (hopefully no worse than near-failure) in 2008. All organizations need to prepare themselves to cope with crises from whatever source. In an ideal world, managers would identify everything bad that could happen to them, and develop a contingency plan for each of these sources of crisis. It is a good idea to be prepared. However, crises by definition are almost always the result of nature, malicious humans, or systems catching us unprepared (otherwise there may not have been a crisis). We need to consider what could go wrong, and think about what we The current issue and full text archive of this journal is available at K 39,5 694 Kybernetes Vol. 39 No. 5, 2010 pp. 694-706 q Emerald Group Publishing Limited 0368-492X DOI 10.1108/03684921011043198
might do to avoid problems. We cannot expect to cope with every contingency, however, and need to be able to respond to new challenges.
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