Sample Essay

A similar categorization was developed by Manuj and Mentzer (2008) in which supply chain risk were classified under eight (8) categories: supply risks, operational risks, demand risks, security risks, macro risks, policy risks, competitive risks, and resource risks. The author though highlights supply, demand, operational, and security risks as particularly important as they directly affect the supply chain. Supply risk are risks associated with inbound supply resulting in the inability of the local firm to meet customer demand (in terms of both quality and quantity) within the agreed time and on budget.

Operational risks are those related to events within the firm that affects its ability to meet customer obligations. Demand risks are those risks that occur in the outbound flow of goods that affect potential customer orders. Security risks relate to adverse effects that threaten human resources, operations integrity and information systems; and may lead to outcomes such as freight breach, vandalism, data theft or proprietary knowledge, and sabotage (Zsidisin, 2003a).

Another widely used classification is that of Ghoshal (1987) in which he classifies risks as:

  • Macroeconomic risks associated with significant economic shifts in wage rates, interest rates, exchange rates, and prices;
  • Policy risks associated with unexpected actions of national governments;
  • Competitive risks associated with uncertainty about competitor activities in foreign markets; and
  • Resource risks associated with unanticipated differences in resource requirements in foreign markets.

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