Question

All companies face some types of supply chain risks. Discuss five (5) different supply chain risk type examples for an importer of fresh fruits.

Answer 1

Supply chain risk is defined as the probability of an incident associated with the inbound supply from individual supplier failures or the supply market occurring in which its outcome results in the inability of the purchasing firm to meet customer demand or cause thread to customer life and safety.

The five types of supply chain risk are as follows:-

1. Financial risk

2. Legal risk

3. Human behaviour risk

4. Environmental risk

5. Scope of schedule risk

1. Financial risk- The risk which are occurred due to change in exchange rates all the way to suppliers bankruptcy.

For a fruit seller he will face financial risk when supplier who supplies the fresh fruit become bankrupt.

2. Legal risk- It is also called contractual risks.It is related to disputes or different interpretations of contractual obligation or from not meeting the requirement of the contract.

If the supplier of fresh fruits will not supply the desired amount of fruits to the importer then importer will face the legal risk.

3. Human behaviour risk- These risk occurred due to departure of key personnel or sometimes due to poor judgement or bad decisions. It is human tendency to make mistakes that it why it also come under this.

Suppose the supplier puts the wrong amount (high as compared to actual one) then the importer of fresh fruits faces the human behaviour risk.

4. Environmental risk- It includes the organisational negative impact on water,air and soil as a result of discharges, remissions and other form of waste.

If the fresh fruit seller is unable to discharge the peels of fruits and vegetables then he can face the environmental risk.

5. Scope of schedule risk- These risk can also have cost implications. They are often a result of of natural disasters such as hurricane, fires or flood.Also when the initial Statement of works becomes unworkable.