Systemic risks in supply chains: a need for system-level governance
Supply Chain Management
; 28(4):682-694, 2023.
Article
in English
| ProQuest Central | ID: covidwho-2293595
ABSTRACT
PurposeGlobal and interconnected supply chains are increasingly exposed to systemic risks, whereby individual failures propagate across firms, sectors and borders. Systemic risks have emerged from the decisions of individual firms, e.g., outsourcing and buffer reduction, and are now beyond their control. This paper aims to identify appropriate approaches to mitigating those risks.Design/methodology/approachSystemic risks require analyzing supply chains beyond a dyadic perspective. This study approaches the problem through the lenses of complex systems and network theories. Drawing on the lessons learned from other systemic-risk-prone systems, e.g. energy and financial networks, both in research and practice, this study analyzes the adequate level of governance to monitor and manage systemic risks in supply chains.FindingsThe authors argue that governance institutions should be mandated to overview and reduce systemic risks in supply chains from the top down, as central bankers do for the financial system. Using firm-level data and tools from network analysis and system dynamics, they could quantify systemic risks, identify risk-prone interconnections in supply chains and design mitigating measures. This top-down approach would complement the bottom-up supply chain management approach and could help insurers design policies for contingent business interruptions.Originality/valueInstead of looking at supply chains purely from the firms' angle, the perspective of insurers and governments is brought in to reflect on the governance of risks.
Business And Economics--Management; Supply chain disruptions; Resilience; Network risks; Cascading failures; Shortages; Global value chains; Contingent business interruptions; System dynamics; Complex systems; Supply chains; Dynamic tests; Gross Domestic Product--GDP; Geopolitics; Network analysis; Economic summit conferences; Coronaviruses; Pandemics; System theory
Full text:
Available
Collection:
Databases of international organizations
Database:
ProQuest Central
Type of study:
Prognostic study
Language:
English
Journal:
Supply Chain Management
Year:
2023
Document Type:
Article
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