Supply Chain Risk Management Review and a New Framework for Petroleum Supply Chains

Abstract

The past financial disasters have led to a great deal of emphasis on various forms of risk management such as market risk, credit risk and operational risk management. Financial institutions such as banks and insurance companies are further motivated by the need to meet various regulatory tendency toward an integrated or holistic view of risks. In USA, the Global Association of Risk Professionals (GARP), and the Profes- sional Risk Managers’ International Association (PRMIA) were established since 1996 and 2002 respectively. In Canada, the Government of Canada, the Govern- ment of Ontario and financial sector leaders recently launched the Global Risk Institute in Financial Services (GRi) in Toronto, with the aim of T building on Canada’s growing reputation in financial risk management. Enterprise risk management (ERM) is an integrated approach to achieving the enterprise’s strategic, programmatic, and financial objectives with acceptable risk. ERM generalizes these concepts beyond financial risks to include all kinds of risks. Enterprise risk management has been deemed as an effective risk management philosophy. We have tried to discuss different aspects of risk, to include finance, information systems, disaster management, and supply chain perspectives (Olson and Wu 2008a, b, 2010). The bulk of this volume is devoted to address four main aspects of risk manage- ment: market risk, credit risk, risk management from both in macro-economy and enterprises. It presents a number of modeling approaches and case studies that have been (or could be) applied to achieve risk management in various enterprises. We include traditional market and credit risk management models such as Black– Scholes Option Pricing Model, Vasicek Model, Factor models, CAPM models, GARCH models, KMV models and credit scoring models; We also include advanced mathematical techniques such as regime-Switching models to address systematic risk, H-P Filtration techniques to manage energy risks. New enterprise risks such as supply chain risk management are also well studied by a few authors in this volume. We hope that this book provides some view of how models can be applied by more readers aiming to achieve quantitative financial risk management.