Risk Management and the Supply Chain Research Paper - 1

Risk Management and the Supply Chain - Research Paper Example This paper will focus discussing the way unknown-unknown risk has a negative impact to supply chain. Moreover, it will also explain the way investing in redundancy, increasing velocity in sensing and responding, and creating adaptive supply chain community can assist in mitigation of this form of risk. A significant aspect of unknown risk is consequences that cannot be predetermined; through they have adverse effects on supply chain of an organization. For example, earthquake is a type of unknown risk, which occurred in Japan on March 11 2010 leading to the devastation of infrastructures that supported supply chain in the country. In this case, this unknown risk interrupted the power systems, and destroyed infrastructures by dumping debris on roads, which interfered with the transport system (The Economist, 2009). Seemingly, this earthquake led to significant interruption of supply chain, which is associated by numerous Japanese companies. Evidently, there were interruptions caused by this disaster such as halting production in companies operating from the north and east of Japan; in fact, they were forced to evacuate. Therefore, these firms were subjected to this unknown risk since consequences such as closing the plant due to shock caused by the earthquake were not anticipated. On the companies affected by this disaster was Renesas, which is a manufacturer of microcontrollers, whereby they were subjected to this unknown risk that led to closure of six facilities. Damages resulting from this disaster have a negative impact on other components that support supply chain such as ports, railway lines, and roads. Therefore, goods are neither transported to local nor international markets. For instance, occurrence of the earth in Japan led to interference of operations in various organizations that are market based such as Sony, whose supply chain was significant affected. Apparently, the impact of this earthquake was also transmitted to