What is it about?
Global supply chains are increasingly exposed to systemic risks, whereby individual failures propagate across firms and borders. Systemic risks have emerged from the decisions of individual firms, e.g., outsourcing and buffer reduction, and are now beyond their control. We argue that governance institutions should be mandated to overview and reduce systemic risks in supply chains from the top down, as central bankers do for the financial system.
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Why is it important?
Instead of looking at supply chains purely from the firms’ angle, we bring the perspective of insurers and governments to reflect on the governance of risks. We draw on lessons from the 2008 financial crisis, power grid blackouts, and recent complex system modeling advances.
Perspectives
Our global supply chains are complex, and risks emerge from this complexity, escaping individual firms’ control. There is a common good problem here, which needs new approaches if governments want to address it. The tools and data are now there. Public institutions with a clear mandate are still missing.
Celian Colon
International Institute for Applied Systems Analysis
Read the Original
This page is a summary of: Systemic risks in supply chains: a need for system-level governance, Supply Chain Management An International Journal, October 2022, Emerald,
DOI: 10.1108/scm-03-2022-0101.
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