Modeling enterprise risk management in operations and supply chain: A pharmaceutical firm context

Abstract

The growing prevalence of disruptive influences in modern operations and supply chains has called for a systematic approach to identify risk sources and to develop predictive enterprise risk management. This imperative has become a top priority for many organizations such as the pharmaceutical industry. This paper leverages a multi-criteria decision making methodology to model enterprise risk management in a focal pharmaceutical firm operations and supply chain. Six types of risks and five strategies are considered and analyzed. Results suggest that supply chain executives attach great importance to regulation/legislation, followed by operational, and reputation risks, while financial, market, and relationship risks ranked low in importance. With respect to enterprise risk management strategies, risk reduction/mitigation was considered the best option followed by risk avoidance option. From the results, it appears that multi-criteria decision making methodology can be used to assist supply chain executives in developing a priority hierarchy for risk management strategies. It can also help the management with a step-by-step approach to identify, assess, and manage portfolio of risks that can be detrimental to their pharmaceutical supply chain performance, brand equity, profit growth, and shareholder value.