The interrelationships in a supply chain are as crucial as the individual members

There may not be directly visible relationship between source and effect of the risk(because of the transmission along the chain)

Research indicates that there is a majority tendency to view supply-chain risk management and contingency planning as a single-firm activity⁵. This is reflected in the widespread practice of passing responsibility for the management of identified risk back up the chain to suppliers, with disregard to what is happening at that level. There is a large dependence on imposition of contractual obligations on suppliers. These may insulate a company from the immediate effects of a supply-chain disruption, but can't improve the resilience of the supply-chain as a whole.

Managing supply-chain risk is difficult because individual risks are often interconnected⁶. Actions that mitigate one risk can end up accentuating others, e.g., a lean supply chain has lower risk of inventory obsolescence but higher disruption risk.

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4 Roshan R. Pai, Venkata R. Kallepalli, Reggie J. Caudill and MengChu Zhou, "Methods Toward Supply Chain Risk Analysis", IEEE, 2003.
5 Dr. Helen Peck and Dr Uta Jüttner, "Risk Management in the Supply chain", Focus, Dec 2002.
6 Sunil Chopra and Manmohan Sodhi, "Managing Risk To Avoid Supply Chain Breakdown", MIT Sloan Management Review, Fall 2004.

* Contributed by -
Krishnakanth K. K. & Pankaj Ghai,
PGP Students.
IIM Lucknow.