1. Claudia COLICCHIA Carlo Cattaneo University - LIUC NESA, Helsinki 9-10 June 2008

2. Helsinki, 9-10 June 2008 Definitions of risk Expected probability of an event or condition whose occurrence, if it does take place, has a harmful or negative effect. "An exposure to serious disturbance, arising from risks within the supply chain as well as risks external to the supply chain. "– Cranfield University “Distribution of the loss resulting from the variation in possible supply chain outcomes, their likelihood, and their subjective values”

3. Helsinki, 9-10 June 2008 Why supply chains are now so vulnerable? Globalization of supply chains Trend towards outsourcing Volatility of demand Reduction of the supplier base Lack of visibility and control procedures Focus on efficiency rather than effectiveness

4. Helsinki, 9-10 June 2008 "The identification and management of risks within the supply chain and risks external to it through a coordinated approach amongst supply chain mambers to reduce supply chain vulnerability as a whole" – Cranfield University Supply Chain Management Risk Management Supply Chain Risk Management Supply chain risk management process SC Strategy SC Risk Assessment SC Risk Reporting SC Risk Mitigation SC Risk Monitoring

5. Helsinki, 9-10 June 2008 RISK ASSESSMENT: AHP method A decompositional technique for multicriteria decision-making [Saaty 1980, 1990, 1994] that: Enables people to make decisions in situations when multiple and conflicting objectives/criteria are present Involves making a series of pair-wise comparisons Uses: - Simple mathematics (calculation of the principal eigenvector) - Criteria - Preferences of that criteria - The standard preference table 1 equally as important 2 equally to moderately more important 3 moderately more important 4 moderately to strongly more important 5 strongly more important 6 strongly to very strongly more important 7 very strongly more important 8 very strongly to extremely more important 9 extremely more important 1 equally as important 2 equally to moderately more important 3 moderately more important 4 moderately to strongly more important 5 strongly more important 6 strongly to very strongly more important 7 very strongly more important 8 very strongly to extremely more important 9 extremely more important

6. Helsinki, 9-10 June 2008 Our sample problem

7. Helsinki, 9-10 June 2008 Decision Hierarchy Lusoponte project EnvironmentalSocialLegalEconomicPoliticalTechnological Additional EIS requirements Design Changes Expropriation difficulties … … …

8. Helsinki, 9-10 June 2008 How it is done Social,Legal, Economic…

9. Helsinki, 9-10 June 2008 Results

10. Future steps Introducing the "risk likelihood function" Considering interdependencies modifying the weight Assessing and compare the results (impact on overall risk) Applying the method in other context using real data