Risk Management Strategies for International Logistics: Conceptualisation and Validation

Globalisation has provided firms with abundant opportunities to exploit cheap labour and raw materials, large product markets and a package of benefits a host government may offer to induce foreign capital (Manuj and Mentzer, 2008a). Nevertheless, the globalised business environment symbolised by long lead times and complexity often results in a high level of supply chain risks, particularly when it is coupled with the business emphasis on efficiency. In general, a global supply chain is considered to be riskier than its domestic counterpart, mainly due to the multitude of interconnections with a wide network of organisations which is prone to a higher chance of disruptions, bankruptcies, breakdowns and disasters (Manuj and Mentzer, 2008b). As globalisation inevitably generates tightly coupled and complex inter-organisational networks where a disruption at one link easily transmits through the chain, the disruptions to material, information and financial flows of a firm's supply chain became a norm (Bode et al., 2011).