Black Swans and Supply Chain Strategic Necessity

Journal of Transport Security, Forthcoming

15 Pages Posted: 23 Aug 2011

See all articles by Raj Aggarwal

Raj Aggarwal

University of Akron; Federal Reserve Banks - Federal Reserve Bank of Cleveland; Kent State University; Kent State University Foundation

Jerry Bohinc

Dawson Partnership LLC

Date Written: August 22, 2011

Abstract

Global supply chains have grown greatly in recent years. Terrorist events that disrupt such supply chains are very hard to assess but have been and are likely to take place occasionally. Given that such disruptions have potentials for creating enormous and difficult to assess economic losses, this paper presents a much-needed approach to assessing and mitigating terrorism related supply chain disruptions. We find that the losses related to indirect effects can be critical and orders of magnitude times larger than direct effects. Because of the tragedy of the commons and related market failures, industry association and/or government action is necessary especially for low probability but high impact events.

Suggested Citation

Aggarwal, Raj and Bohinc, Jerry, Black Swans and Supply Chain Strategic Necessity (August 22, 2011). Journal of Transport Security, Forthcoming, Available at SSRN: https://ssrn.com/abstract=1914713

Raj Aggarwal (Contact Author)

University of Akron ( email )

Akron, OH 44325-4803
United States

Federal Reserve Banks - Federal Reserve Bank of Cleveland ( email )

East 6th & Superior
Cleveland, OH 44101-1387
United States

Kent State University ( email )

College of Business Administration
Kent, OH 44242-0001
United States

Kent State University Foundation ( email )

Akron, OH 44325-4803
United States

Jerry Bohinc

Dawson Partnership LLC ( email )

7659 Cairn Lane
Gates Mills, OH 04040
United States

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