Risk management in global supply chains : A review based on the impact of COVID-19

Abstract: Global supply chains (GSCs) are formed with the primary objective of cost minimization. Apart from cost reductions, GSCs also have other benefits like opening up new markets, reduction in the price of the product sold, and increasing production capacity. The benefits of GSCs are significant only when the environment it works in is stable. But in real life, almost all the systems are stochastic. While companies try to globalize their supply chains (SC), it is important to understand and evaluate the risks associated with global expansion. Several risk events arise in global supply chains and efficient management of these probable risk events plays a crucial role. Supply chain risk management (SCRM) is the implementation of strategies to manage both everyday and exceptional risks along the SCs based on continuous risk assessment to reduce vulnerability and ensure continuity. But there is a need to differentiate risk management of domestic and global supply chains due to additional risk elements involved in the functioning of GSCs. COVID-19 pandemic is one such risk event that has disrupted the GSCs of many companies around the world. Hence, the purpose of this study is to examine whether the framework of risk management in global supply chains needs reviewing after the manifestation of the COVID-19 pandemic. To fulfill the purpose, the study is divided into 2 sections. A literature review is done in supply chain management, supply chain risk management using the keywords mentioned below. Interviews were conducted with companies having GSCs. The interviews help in primary data collection for understanding the impact of COVID-19 on GSCs. Questions regarding company background, strategy for RM, the impact of COVID-19 on the GSC, and previous catastrophic impacts & future plans were asked. The collected data is processed and analyzed to arrive at findings. These findings are compared with theory to conclude by answering the research questions.  The findings prove that the existing risk management (RM) framework is sufficient to handle risk events such as pandemics. The benefits of implementing risk monitoring are visible with the comparison of the impact of RM strategies prior to and during the pandemic. Disruptive events such as COVID-19 cannot be completely avoided but can be mitigated. Several risk types occur due to catastrophic events as risk types are interconnected. Hence, all risk types must be evaluated for the RM plan. The impact is also dependent on local restrictions. Hence, it should also be considered in RM plans. Coordination mechanisms and robust strategies have shown that resiliency and flexibility improve and have reduced the impact of COVID-19 both proactively and reactively. So, it shows that the existing RM framework has the capability of mitigating the impacts of future pandemics and does not require updating.