Systemic risk assessment in complex supply networks

Anna Ledwoch, Alexandra Brintrup, Jörn Mehnen, Ashutosh Tiwari

Research output: Contribution to journalArticle

3 Citations (Scopus)
281 Downloads (Pure)

Abstract

The growth in size and complexity of supply chains has led to compounded risk exposure, which is hard to measure with existing risk management approaches. In this study, we apply the concept of systemic risk to show that centrality metrics can be used for complex supply network risk assessment. We review and select metrics, and set up an exemplary case applied to the material flow and contractual networks of Honda Acura. In the exemplary case study, geographical risk information is incorporated to selected systemic risk assessment metrics and results are compared to assessment without risk indicators in order to draw conclusions on how additional information can enhance systemic risk assessment in supply networks. Katz centrality is used to measure the node’s risk spread using the World Risk Index. Authority and hub centralities are applied to measure the link risk spread using distances between geographical locations. Closeness is used to measure speed of disruption spread. Betweenness centrality is used to identify high-risk middlemen. Our results indicate that these metrics are successful in identifying vulnerabilities in network structure even in simplified cases, which risk practitioners can use to extend with historical data to gain more accurate insights into systemic risk exposure.
Original languageEnglish
Pages (from-to)1-12
Number of pages12
JournalIEEE Systems Journal
DOIs
Publication statusPublished - 24 Aug 2016

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Risk assessment
Risk management
Supply chains

Keywords

  • systemic risk
  • betweenness centrality
  • closeness centrality
  • complex supply networks
  • HITS
  • Katz centrality
  • network science
  • radiality

Cite this

Ledwoch, Anna ; Brintrup, Alexandra ; Mehnen, Jörn ; Tiwari, Ashutosh. / Systemic risk assessment in complex supply networks. In: IEEE Systems Journal. 2016 ; pp. 1-12.
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Systemic risk assessment in complex supply networks. / Ledwoch, Anna; Brintrup, Alexandra; Mehnen, Jörn; Tiwari, Ashutosh.

In: IEEE Systems Journal, 24.08.2016, p. 1-12.

Research output: Contribution to journalArticle

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