Risk analysis is a practice with methods and tools for identifying risks in a process (Sinha
et al., 2004). It provides a disciplined environment for proactive decision making to assess
continuously what could go wrong, determining which risks are important to deal with
and implement strategies to deal with those risks (Shtub et al., 1994). Risk assessment
includes deciding values for different risks. However, information for all types of risky
events is not available, so it is not possible to do a solid risk calculation (Giannakis and
Louis, 2011). Risk analysis means systematic identification of the risk sources and estimation
of the risks. The estimation should include a judgment of the likelihood of risky event that
is going to take place and its probable business impact. A properly carried out risk analysis
creates the basis for choosing the right actions for protection and safety. There are a number
of different analysis methods with varying degrees of complexity. Some of the methods are
simple and quickly carried out, while others are complicated and time-consuming.
Individual companies can create an enterprise vulnerability map, which can direct
management attention. This vulnerability map is continuously updated (Zsidisin et al.,
2004). Assessing supply risk including appraising its likelihood of occurrence, stages in the
product life cycle, exposure, likely triggers and likely loss is a critical step in managing the
risk inherent in a firm’s overall supply network (Harland et al., 2003).
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