Economics

Why Most Finance Functions Needs to Take a Second Look at SCM

One of the principal arguments this blog makes is that financial and risk analysis in SCM must develop onto a much higher plane than is common today. A recent paper suggests ways in which this development can take place. A recent paper by Moritz Leon Gomm* notes the following: Finance in general and the capital […]

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Economics

Beyond the Physical World in Procurement Risk Management

It is unusual to scan across a magazine or web site dedicated to supply chain and not find at least one article focused on risk management. However, the great majority of these articles deals with only one of the two aspects of supply chain risk, namely physical risk -the risk of something going wrong with […]

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Economics

Risk Metrics: VoR (Velocity of Risk) in Managing SC Risk

VoR, or Velocity of Risk, is a concept that appears now and again and discussions of risk management. The basic concept is that in addition to the impact of a risk event, one also wants to understand the velocity at which that event reaches a given level of impact once certain conditions have been met. […]

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Economics

For Operations Risk, It’s the Neon Swan That Matters Most

A frequent question I get asked is “how do I prepare against black swans?” Ever since Nassin Nicholas Taleb’s “The Black Swan,” this is a topic that comes up frequently in risk management discussions. However, though these events are important to consider a much more relevant (to most companies) question to ask is, “how do […]

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Regulations

Enron 10 Years Later (Part 2): The Original Fortune Article

Is Enron Overpriced? In March 2001, FORTUNE pointed out that Enron’s financial statements were nearly impenetrable. January 19, 2006: 11:34 AM EST EDITOR’S NOTE – Remember when it seemed outrageous to suggest that Enron shouldn’t be the golden child of Wall Street? Before the congressional hearings, before Arthur Andersen was indicted, before the SEC and […]

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Economics

Credibility Theory and Supply Chain Risk

At the forefront of the SC quant world today is the creation of new ways of thinking about SC risk that go beyond the protection of physical assets, which has long been the principal focus of practices such as Business Continuity Planning (BCP). One of the goals of this new approach is to facilitate the […]

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Economics

“Sprinkling”: Supply Risk Goes Mainstream

US Senator Carl Levin recently sounded the alarm bell about “sprinkling,” which is the practice of mixing counterfeit parts with real ones. An excerpt from the AP article on the Senate hearing is below: The committee’s ongoing investigation found about 1,800 cases of suspect counterfeit electronics being sold to the Pentagon. The total number of […]

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Economics

Enron: 10 Years Later

The Nov 8th issue of Energy Risk has an interesting commentary by Stella Farrington noting the 10th anniversary of the Enron collapse. Perhaps the most interesting point she makes is the following: “Almost without exception Enron employees said it was the best place they have ever worked before or since and talked of achieving more […]

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