On Managing Disruption Risks in the Supply Chain - the DRISC model

Background Today's modern, industrialized society is based on globalization, specialization and mass-production. It is a society dependent upon highly integrated, continuously ongoing supply chain flows. Disruptions in those flows may cause devastating negative consequences, both for the individual company, for the supply chain, and for the society at large. Purpose and objectives The purpose of the thesis is to contribute to the knowledge on how to manage disruption risks in the supply chain. There are two objectives. The first is to ?to identify, structure and summarize the state of the art on supply chain disruption risks?. The second is ?to develop and test a generic, aggregate model for managing disruption risks in the supply chain?. Method The first objective is fulfilled with the help of a general search in literature within the areas of risk, risk management, supply chain management, and supply chain risk. The results from the literature review are then complemented with empirical material, and the existing knowledge within each area is summed up and analysed. Finally conclusions are drawn and suggestions for new research are presented. The identified research need is used as starting point for the fulfilment of objective two. A model, called the DRISC model (Disruption Risks In Supply Chains), dealing with the risks of disruptions in the product flow in the supply chain from raw material to end market, is developed. The usability of the complete DRISC model is tested through application on a real case and through a survey among risk managers. Results The state of the art review revealed that supply chain risk management can be described as a new area under rapid development with several interesting ?islands of theories? but yet without any common, solid foundation of basic concepts and generic models. The DRISC model covers, as seen from the angle of an individual company in the supply chain, all potential product flow-related disruption risks in the total supply chain. These risks are classified into 15 different classes that are assessed and summarized into a total expected consequence value. The model further assists in finding new and better ways to handle those risks. The test of the DRISC model on a real case, Brämhults, showed that the model was of value for identifying, structuring and estimating the supply chain risks and for giving an overall picture of the risk exposure situation. The survey of risk managers confirmed that