Consideration of risk management is very critical in many business areas, that when this is taken seriously, may eventually give the organization some favorable impacts on profitability, efficiency and sustainability, as said by O. Zwikael & M. Ahn (2011). Over the last decade, there has been a growing interest in risk management. Stakeholders’ expectations regarding risk management have been rising rapidly, especially since the recent financial crisis. In that crisis, weaknesses in risk management practices became painfully visible, and companies are currently under significant pressure to strengthen their risk management systems and to take appropriate actions to improve stakeholder value protection.
(L. Paape and R. Spekle, 2012). As continuity of business operation is the first and primary goal of the management, each organization must respond to risks then.
There are many alternative ways in which the organization can apply the risk management approach. i.e., risk must be first identified, and when they do, specific responses should be taken into consideration from which the performance outcomes are determined.
Olson D.L, & D. Wu (2010).
Risk Management in Supply Chain: The planning, mitigation and evaluation of risk is also of primary importance in the risk management to ensure risks are identified and avoided. Risk Management Objectives can have different aspects such as, health, safety and environmental goals and applied at different levels, such as strategic, organization, project, product and process), 3.48, Note 2, Effect of Uncertainty Objectives (ISO22301: 2012) From the infographics published by Szmigiera, (2019) research department on risks to global business, Business Interruption to Supply Chain tops the list because of its vulnerability.
Risk to Global Business in 2019
2018/#country/MAR\nThere has been five SCRM (Supply Chain and Risk Management) journals that were published in the last decade, (Ho, Zheng, Yildiz, & Talluri, 2015).
In the study made by Ho, et.al. (2015), risks are classified into different categories such as, Supply, Demand, Product and Information management for managing supply risks. Also in the same study the diverse literature was synthesized into topology of risk factors including environmental, industrial, organizational, problem specific and decision-maker related factors.
Tang & Musa (2011) adapted the literature, identified and classified potential risks associated with material, compliance risks and information flow. Then Colicchia & Strozzi (2012) also applied citation and identified evolutionary patterns and emerging trends in SCRM. Sodhi, Son and Tang (2012) all formulated their own perception of diversity in SCRM, conducted survey and were able to identify three gaps, which are Definition Gaps, Process Gaps and Methodology Gaps. These gaps are all part of the Supply Chain Risks.
Dynamics of structures and processes is one of the underlying challenges in supply chain management, where multiple dimensions of economic efficiency, risk management and sustainability are interconnected. (Ivanov, 2017)
According to the study conducted by Ivanov (2017), the mere problem in an organization to maintain its sustainability in all aspects, is its resilience on its entire supply chain, as cited by the authority in the field of Risk Resilience such as the Bureau Veritas, a recognized global leader in Testing, Inspection and Certification Body, that goes beyond simple compliance on regulations and standards, but focuses on reducing risks, improving performance and promoting sustainable development. (Bureau Veritas Philippines, n.d.).
The global business environment poses high level of risk and complexity. Human behavior, webbed activities, technological advancement and continued innovation all introduce change. Whenever there is change, potential risks of events happening is most likely to occur. In the Global Business Perspective, the subtlety of focus on risk management may have impact to the performance of the company in terms of achieving its objectives.
Therefore, risk as understood is a negative event most likely to be experienced by an organization, process and systems on their entire supply chain be it external or internal, that the company is at greater risk when they are not anticipated and analyzed and controlled. The absence of resiliency then may expose many organizations to a myriad of risks within any point in time.