Risk Assessment and Contingency Planning in Emerging Markets
James L. Patterson, Ph.D., C.P.M., A.P.P.
James L. Patterson, Ph.D., C.P.M., A.P.P., Associate Professor of Management, Western Illinois University – Quad Cities, 309/762-9481; JL-Patterson2@wiu.edu
90th Annual International Conference Proceedings - 2005 - San Antonio, TX
With the growing complexity of global sourcing coupled with significant cost reduction initiatives at the firm level, supply managers now reach into emerging markets for the procurement of goods and services. The question of managing the risks inherent in sourcing from emerging markets is twofold: 1) What are the common sources of risk?, and 2) How can we manage them effectively? Risk is defined as the magnitude of exposure to financial loss or operational disruption and stems from uncertainty in the emerging markets sourcing process. All risk must be evaluated relative to potential cost exposure and the likelihood of occurrence. Several generally-accepted contingency management techniques are offered to help supply base managers mitigate these potential losses and supply disruptions.