A practical supply chain risk management approach using VaR

In these recent years, the complexity of supply chain has been increasing with globalisation and as such, disruptions are happening more frequently with the impacts getting more severe. Thus, there is a growing need to deal with such risks arising from disruptions to the supply chain. The objective of this paper is to present a practical method for supply chain risk management using Value at Risk (VaR), a technique to identify, assess and mitigate these disruption risks. The method aims to tackle possible risks through the application of VaR and provides deterrent solutions. Through this method, firms will be able to conduct “what-if” analysis to manage potential risks and thus minimizing the impact of the risks to their supply chains during the sudden occurrence of disruptions.