Definition of Probability is how much an event is likely to happen, so certainly there are uncertainties lying in an event because of some decision making that we call“Risk” of failure of an event. The chain starts from supplier to customer where material, information and funds flow in both the directions. Supply chain managers make different strategies to reduce the disruption in flow of these three factors but still there is always risk of failure because of different factors associated with supply chain. As per More Khan and Bernard Burnes in their research paper “Risk and supply chain management: creating a research agenda” risk in supply chain can be primarily divided in to two main types. First is the technological risk and second is strategic riskCompanies however, takes measures to keep the suppliers in control by score card system or by continuously reviewing them but this also increases supply chain risk as the number of suppliers’ base reduces. Further considering the above reasons, first there is a need to identify these factors which may be responsible for any kind of deviations in the required results. Some of these factors are controllable and some may not, but level of effect of that particular factor needs quantification so as to access the level of risk pertaining to every factor.

A live case example of BEHR India’s supply chain is taken in this case to study the risk associated with its overseas vendors and risk pertaining to its imported material. By the same logical approach as stated above, firstly the different risk associated with supply chain, its external and internal factors causing the risks, in any particular part of the supply chain is identified. Once the different factors were identified, the data was collected using various data collection techniques to quantify the risk that is being discussed about. Risk quantification can be done with the help of different mathematical and statistical model, and with the help of these models different risk bands were created which basically signifies the severity of risk associated with any particular factor.

Supposing a supply chain manager needs to select a vendor for distribution of a new material or the manager gives an order for supply of a material, he needs to access a vendor performance based on delivery or quality defects etc. These failures in delivery within time or supplying defective parts are example of risks to the manager. Thus, after quantification of these risks, a supply chain manager can analyse the risk associated with any particular vendor with respect to different factors and then can make decisions. Dynamic risk assessment tool is a decision making tool for managers and thus it might also help to make proper strategies for mitigating risk in a system.