Risk Management of Critical Logistical Infrastructures: Securing the Basis for Effective and Efficient Supply Chains

Abstract

To establish both effective and efficient supply chains, not only planning, controlling, and monitoring of material, information, and financial flows are necessary, but also the logistical infrastructure must be available and in an appropriate condition for all required processes. However, in the recent past, various events led to a limitation—or even to a breakdown—of the logistical infrastructure. These often unanticipated events—ranging from natural catastrophes such as an earthquake, to political crises such as in Eastern Ukraine, to terror attacks—might have a tremendous impact on supply chains. However, in supply chain risk management , the explicit consideration of risks for the logistical infrastructure is often ignored. We therefore focus on the critical logistical infrastructure and develop an evaluation approach for decision makers to support them in channeling risk management activities. The evaluation considers how the limitation or breakdown of any element of the logistical network influences all supply chains that use the network. By calculating risk-induced costs for the supply chains, implications of risk can be quantified and used as a basis for decision making.