Risk Budget Planning through Assessing the Criticality and Vulnerability of Supply Network Entities Facing Disruption Risks

摘要

Material flow disruptions can cause serious damage in supply networks. Quantitative models which support the decision process in supply chain risk management need to be designed to support practitioners. This approach combines Monte-Carlo Simulation with Agent-Based Modeling to quantify the degree of vulnerability and criticality of entities in a real, complex supply network. This quantification can help to form a joint budget for risk mitigation in which the degree of vulnerability determines the investment contribution. The quantification of criticality helps to identify the locations which are responsible for disproportionate damages in case of a disruption. The simulation of the modeled network shows that the most vulnerable entities in the system are not necessarily the most critical and that these entities must carry the financial burden that have been triggered by the disruption of other entities. The results emphasize that a joint and holistic approach is necessary to cope with the propagative features of disruptions.