Systemic Risk Assessment in Complex Supply Networks

The growth in size and complexity of supply chains has led to compounded risk exposure, which is hard to measure with existing risk management approaches. In this study, we apply the concept of systemic risk to show that centrality metrics can be used for complex supply network risk assessment. We review and select metrics, and set up an exemplary case applied to the material flow and contractual networks of Honda Acura. In the exemplary case study, geographical risk information is incorporated to selected systemic risk assessment metrics and results are compared to assessment without risk indicators in order to draw conclusions on how additional information can enhance systemic risk assessment in supply networks. Katz centrality is used to measure the node’s risk spread using the World Risk Index. Authority and hub centralities are applied to measure the link risk spread using distances between geographical locations. Closeness is used to measure speed of disruption spread. Betweenness centrality is used to identify high-risk middlemen. Our results indicate that these metrics are successful in identifying vulnerabilities in network structure even in simplified cases, which risk practitioners can use to extend with historical data to gain more accurate insights into systemic risk exposure

Failure dynamics of the global risk network

Risks threatening modern societies form an intricately interconnected network that often underlies crisis situations. Yet, little is known about how risk materializations in distinct domains influence each other. Here we present an approach in which expert assessments of risks likelihoods and influence underlie a quantitative model of the global risk network dynamics. The modeled risks range from environmental to economic and technological and include difficult to quantify risks, such as geo-political or social. Using the maximum likelihood estimation, we find the optimal model parameters and demonstrate that the model including network effects significantly outperforms the others, uncovering full value of the expert collected data. We analyze the model dynamics and study its resilience and stability. Our findings include such risk properties as contagion potential, persistence, roles in cascades of failures and the identity of risks most detrimental to system stability. The model provides quantitative means for measuring the adverse effects of risk interdependence and the materialization of risks in the network

Global Risks 2014, Ninth Edition.

The Global Risks 2014 report highlights how global risks are not only interconnected but also have systemic impacts. To manage global risks effectively and build resilience to their impacts, better efforts are needed to understand, measure and foresee the evolution of interdependencies between risks, supplementing traditional risk-management tools with new concepts designed for uncertain environments. If global risks are not effectively addressed, their social, economic and political fallouts could be far-reaching, as exemplified by the continuing impacts of the financial crisis of 2007-2008

Global Risks 2012, Seventh Edition

The World Economic Forum's Global Risks 2012 report is based on a survey of 469 experts from industry, government, academia and civil society that examines 50 global risks across five categories. The report emphasizes the singular effect of a particular constellation of global risks rather than focusing on a single existential risk. Three distinct constellations of risks that present a very serious threat to our future prosperity and security emerged from a review of this year's set of risks. Includes a special review of the important lessons learned from the 2011 earthquake, tsunami and the subsequent nuclear crisis at Fukushima, Japan. It focuses on therole of leadership, challenges to effective communication in this information age and resilient business models in response to crises of unforeseen magnitude

Complexity and trust – experiences from local Danish Food Communities

Generally food consumers in Denmark do not trust the food production and distribution systems and the management of risk related to food consumption has become part of the daily life of many (Halkier & Holm, 2004). This paper explores how relations of trust are formed in two local Danish Food Communities (Fødevarefællesskaber) in Aarhus and Copenhagen. Food Communities are communities of consumers organized around the provision of local fresh vegetables directly from local producers. The Food Communities, together with local farmers, share the responsibilities, normally carried out by other market actors, such as logistics, sale and price formation. The vegetables are sold to the members of the community, at a relatively low price, if they take part in the duty work related to the food provisioning. The community functions despite no binding or long term agreements are made between the communities and the producers. The aim of this paper is to evaluate what role trust plays in order for the communities to function. Focus is given to 1) the mechanisms that create and maintain trust between the actors and 2) the challenges that the relations of trust are exposed to and 3) how the communities are dealing with these challenges

The Coherence Problem: Mapping the Theory and Delivery of Infrastructure Resilience Across Concept, Form, Function, and Experienced Value

In this contribution we explore the interface between the functional characteristics of infrastructures as artefacts and social need supplier. Specifically we are concerned with the ways in which infrastructure performance measures are articulated and assessed and whether there are incongruities between the technical and broader, social goals which infrastructure systems are intended to aspire to. Our analysis involves comparing and contrasting system design and performance metrics across the technical — social boundary, generating new insights for those tasked with the design and operation of networked infrastructures. The assessment delivered in the following sections is inherently interdisciplinary and cross-sectoral in nature, bringing thinking from the social and environmental sciences together with contributions from mathematics and engineering to offer a commentary which is relevant to all types of physical infrastructure

Evolution of the Global Risk Network Mean-Field Stability Point

With a steadily growing human population and rapid advancements in technology, the global human network is increasing in size and connection density. This growth exacerbates networked global threats and can lead to unexpected consequences such as global epidemics mediated by air travel, threats in cyberspace, global governance, etc. A quantitative understanding of the mechanisms guiding this global network is necessary for proper operation and maintenance of the global infrastructure. Each year the World Economic Forum publishes an authoritative report on global risks, and applying this data to a CARP model, we answer critical questions such as how the network evolves over time. In the evolution, we compare not the current states of the global risk network at different time points, but its steady state at those points, which would be reached if the risk were left unabated. Looking at the steady states show more drastically the differences in the challenges to the global economy and stability the world community had faced at each point of the time. Finally, we investigate the influence between risks in the global network, using a method successful in distinguishing between correlation and causation. All results presented in the paper were obtained using detailed mathematical analysis with simulations to support our findings.Comment: 11 pages, 5 figures, the 6th International Conference on Complex Networks and Their Application

On Resilient Behaviors in Computational Systems and Environments

The present article introduces a reference framework for discussing resilience of computational systems. Rather than a property that may or may not be exhibited by a system, resilience is interpreted here as the emerging result of a dynamic process. Said process represents the dynamic interplay between the behaviors exercised by a system and those of the environment it is set to operate in. As a result of this interpretation, coherent definitions of several aspects of resilience can be derived and proposed, including elasticity, change tolerance, and antifragility. Definitions are also provided for measures of the risk of unresilience as well as for the optimal match of a given resilient design with respect to the current environmental conditions. Finally, a resilience strategy based on our model is exemplified through a simple scenario.Comment: The final publication is available at Springer via http://dx.doi.org/10.1007/s40860-015-0002-6 The paper considerably extends the results of two conference papers that are available at http://ow.ly/KWfkj and http://ow.ly/KWfgO. Text and formalism in those papers has been used or adapted in the herewith submitted pape