A Fuzzy-Based Holistic Approach for Supply Chain Risk Assessment and Aggregation Considering Risk Interdependencies

Abstract

Supply chain risk management requires dealing with uncertainty, interrelations, and subjectivity inherent in the risk assessment process. This paper proposes a holistic approach for risk management that considers the impact on multiple performance objectives, the relation between risk agents, and the risk event interdependencies. An aggregated risk score is proposed to capture the cascading effects of common risk triggers and quantify the aggregated score by risk agent and objective. The approach also uses fuzzy logic to allow for the treatment of vague and ambiguity data as input parameters to the model from different domains and scales, according to knowledge and criteria nature. The integration of the balanced scorecard tool improves the analysis and prioritization of mitigation strategies in decision-making, both by risk agent and by strategic objective. A case study of a telecommunication company is presented to illustrate the applicability of the proposed approach.