An extended risk matrix approach for supply chain risk assessment

Risk assessment is important for ranking risks properly and allocating limited resources to mitigate critical risks. The paper reviews the risk assessment approaches with a focus on the advantages, limitations and applications of the Risk Matrix Approach (RMA). The paper then proposes an extended risk matrix approach (ER-MA) for supply chain risk assessment. The purpose is to overcome the limitations of traditional RMA, enrich the features and improve its applicability in supply chain risk management (SCRM). In the proposed approach, new dimensions of risk metrics — detectability and recoverability — are incorporated to capture the complexities of supply chain risks which are important to supply chain managers. The new approach is tested out in a case study of a MNC supply chain and the key findings are presented.