The paper "The Role and Importance of Supply Chain Risk Management" is a great eample of management coursework. There have been different definitions provided by many scholars in relation to Supply Chain Risk Management. The Supply Chain Risk Management refers to the management of supply chain risk by coordinating and collaborating among the partner's supply chain in ensuring continuity as well as profitability (Tang, 2006). In simple defence and security issues, SCRM can be defined as a discipline of management that seeks to address the threats as well as vulnerabilities of commercially acquired communications and information technologies within and used by government weapon and information systems (Christopher et al.
2014). Admittedly, over the last few decades, the last few years, Supply Chain Risk Management (SCRM) is seen as among the main topics that need to be addressed about the Supply Chain Management (SCM). Admittedly, the increased terrorist attacks, the increased number of weather-related/man-made catastrophes, as well as the spread of diseases and viruses have led to the more exposed vulnerability of complex as well as globalized supply chains. In this way, studies have tried to find systematic and structured concepts for risk management within supply chains.
Despite the reality that researchers have come up with different approaches in order to reduce the lack of sensitization and awareness towards the underlying risks in supply chains, it must be agreed that there exist methodological gaps in not only conceptual and empirical but also industry-specific research. According to Jü ttner et al. (2003), a framework of incorporating most significant aspects and strategies the establishment of a common set of definitions is yet to be developed, which makes the SCRM field seem somehow chaotic and disorganized.
In this way, supply chain risk focuses on any likely negative consequence, both expected and unexpected in the process of extending message, materials, as well as finances from the supplier to the end consumer. The major intention of Supply Chain Risk Management (SCRM) is to reduce the risk consequences of hazardous events through the increase of supply chain resilience, which refers to the ability of a system returning to the previous state or changing to a new and more desirable one after it has been disturbed (Finch 2004).
At the same time, SCRM seeks to reduce the vulnerability of the system or reducing the exposures to extreme disturbances that arise from risks in the supply chain including risks that come from external sources (Christopher 2011). In order to ensured that vulnerability to expected and unexpected risk in supply chain systems is reduced, different scholars provide varying solutions (Tang 2006). However, the majority of the scholars have seemed to be agreeing on the reality that the processes of risk management should be divided into three categories for effective risk management.
The three stages of risk vulnerability reduction involve identification, assessment, and mitigation of risks (Jü ttner et al. 2003). Risk identification refers to efforts of discovering the sources of risks, events that trigger the occurrence of such risks, as well as identifying the early signs or indictors in the supply chain, which may lead to the vulnerability (Christopher et al. 2011). The objective is to consider the relevance of these factors for further steps to be taken. Notably, another important issue under-identification of risks is the categorization of risks since different categories provided a general outlook of risks, which are inherent in the supply chain.
Accordingly, risks can be categorized into two groups (Leeman, 2010). The first category is the supply-demand coordination risk, which refers to the operational risks that may occur due to the existence of imbalance between supply and demand. Secondly, risks are categorized into disruption risks, which are related to the unforeseen events that lead to the interruption of normal business operations. In some instances, these two ways of categorizations are referred to as the operational catastrophes and strategic uncertainties respectively.
According to Manuj, Mentzer (2008), Jü ttner et al. (2003), Christopher, and Peck (2004), the risk categorized shows to be done by dividing them into four or more types. In most cases, such categorization includes the supply risks, customer-induced demand risks internal risks and environmental risks that are not included in the supply chain such as resource risks, policy risks, ecological risks, macro-economic risks as well as issues of security.
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