Enterprise Risk Management in Supply Chains
All human endeavors involve uncertainty and risk. Mitroff and Alpaslan (2003) categorized emergencies and crises into three categories: natural disasters, malicious activities, and systemic failures of human systems. Nature does many things to us, disrupt
- PDF / 215,114 Bytes
- 13 Pages / 439.37 x 666.142 pts Page_size
- 74 Downloads / 206 Views
Enterprise Risk Management in Supply Chains
All human endeavors involve uncertainty and risk. Mitroff and Alpaslan (2003) categorized emergencies and crises into three categories: natural disasters, malicious activities, and systemic failures of human systems.1 Nature does many things to us, disrupting our best-laid plans and undoing much of what humans have constructed. Events such as earthquakes, floods, fires and hurricanes are manifestations of the majesty of nature. Recent events to include the tsunami in the Indian Ocean and Hurricane Katrina in New Orleans in 2005 demonstrate how powerless humans can be in the face of nature’s wrath. Malicious acts are intentional on the part of fellow humans who are either excessively competitive or who suffer from character flaws. Examples include Tylenol poisonings of 1982, placing syringes in Pepsi cans in 1993, bombing the World Trade Center in 1993, Sarin gas attacks in Tokyo in 1995, terrorist destruction of the World Trade Center in New York in 2001, and corporate scandals within Enron, Andersen, and WorldCom in 2001. More recent malicious acts include terrorist activities in Spain and London, and in the financial realm, the Ponzi scheme of Bernard Madoff uncovered in 2009. Wars fall within this category, although our perceptions of what is sanctioned or malicious are colored by our biases. Criminal activities such as product tampering or kidnapping and murder blend are clearly not condoned. Acts of terrorism are less easily classified, as what is terrorism to some of us is expression of political behavior to others. Similar gray categories exist in the business world. Marketing is highly competitive, and positive spinning of your product often tips over to malicious slander of competitor products. Malicious activity has even arisen within the area of information technology, in the form of identity theft or tampering with company records. The third category is probably the most common source of crises: unexpected consequences arising from overly complex systems.2 Examples of such crises include Three Mile Island in Pennsylvania in 1979 and Chernobyl in 1986 within the nuclear power field, the chemical disaster in Bhopal India in 1984, the Exxon Valdez oil spill in 1989, the Ford-Firestone tire crisis in 2000, and the Columbia space shuttle explosion in 2003. The financial world is not immune to systemic failure, as demonstrated by Barings Bank collapse in 1995, the failure of Long-Term Capital Management in 1998, and the sub-prime mortgage bubble implosion leading to near-failure (hopefully no worse than near-failure) in 2008. D.L. Olson, D. Wu, Enterprise Risk Management Models, C Springer-Verlag Berlin Heidelberg 2010 DOI 10.1007/978-3-642-11474-8_1,
1
2
1
Enterprise Risk Management in Supply Chains
Unexpected Consequences Charles Perrow contended that humans are creating technologies that are high risk because they are too complex, involving interactive complexity in tightly coupled systems. Examples include am systems, which have provided a great deal of
Data Loading...
