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Risk matrix driven supply chain risk management: Adapting risk matrix based tools to modelling interdependent risks and risk appetite

Qazi, Abroon; Akhtar, Pervaiz

Authors

Abroon Qazi

Pervaiz Akhtar



Abstract

There is a major research gap of developing a supply chain risk management process integrating the risk appetite of a decision maker and all stages of the risk management process within an interdependent network of systemic risks. We introduce an iterative process, namely risk matrix driven supply chain risk management, to bridge this gap. We make use of the recently introduced concept of utility indifference curves based risk matrix to capture the risk attitude of a decision maker. We also present algorithms for assessing and mitigating interdependent risks for risk-neutral and risk-averse/seeking decision makers and demonstrate the application of our proposed process through a simulation study. Utilising the method of cost-benefit analysis within an interdependent setting of interacting risks and risk mitigation strategies, we also propose a second approach that can help a decision maker to determine a set of Pareto-optimal risk mitigation strategies and select optimal solutions subject to the budget constraint and specific risk appetite.

Journal Article Type Article
Publication Date 2018-08
Print ISSN 0360-8352
Publisher Elsevier
Peer Reviewed Peer Reviewed
APA6 Citation Qazi, A., & Akhtar, P. (2018). Risk matrix driven supply chain risk management: Adapting risk matrix based tools to modelling interdependent risks and risk appetite. Computers and Industrial Engineering, doi:10.1016/j.cie.2018.08.002
DOI https://doi.org/10.1016/j.cie.2018.08.002
Keywords Supply chain risk management; Systemic risks; Risk appetite; Utility indifference curves; Risk matrix; Algorithms
Publisher URL https://www.sciencedirect.com/science/article/pii/S0360835218303747
Copyright Statement © 2019. This manuscript version is made available under the CC-BY-NC-ND 4.0 license http://creativecommons.org/licenses/by-nc-nd/4.0/

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Copyright Statement
© 2019. This manuscript version is made available under the CC-BY-NC-ND 4.0 license http://creativecommons.org/licenses/by-nc-nd/4.0/





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