Risk Management in Supply Chains

Master 2019/2020

Type: Elective course (Strategic Management in Logistics)

Area of studies: Management

Delivered by: Department of Logistics

Where: Graduate School of Business

When: 1 year, 4 module

Mode of studies: offline

Instructors: Denis Gusev

Master’s programme: Strategic Management in Logistics

Language: English

ECTS credits: 3

Contact hours: 35

Full Syllabus

Abstract

The main purpose of the discipline is to teach students the methodology and methods of construc-tion and the practical application of the models representing the economic risks, methods of analysis and comparison of alternatives in terms of risk, economic risk management methods, using traditional and modern technologies in the format of the supply chain. Discipline is read for Master's student in the first year of the specialty. The course program in-cludes conducting seminars. Topics of the studies are given in the relevant thematic terms. In these classes students practice skills in the use of risk management techniques based on the knowledge of the relevant theoretical material. The program provides a student's control work. Independent work of the student also includes: learning the theoretical material at a level sufficient for understanding the topics and sections of the course, and to participatie in the seminars, which will consolidate the skills of risk management tech-niques.

Learning Objectives

The main purpose of the discipline is to teach students the methodology and methods of construc-tion and the practical application of the models representing the economic risks, methods of analysis and comparison of alternatives in terms of risk, economic risk management methods, using traditional and modern technologies in the format of the supply chain.
Based on current requirements needed to consider the logistics risks in the supply chain as a result of the discipline, the students must: - be able to freely navigate in applied research on the analysis and management of risks in the supply chain; - know and use in their future activities of the appropriate methods and models in the format of the problems of analysis and economic risk management in supply chains, including – • methods of risk analysis and management based on the classical approach of the theory of risk; • methods of risk analysis and management based on the concept of utility; • methods of analysis and risk management through the use of a decision tree; • methods of market risk management; • methods of redistribution of logistics risks; • methods of logistics risks based on their diversification; • methods of logistics security risks. - understand of the assessment of the adequacy of the models - to establish the possibility of their application, to correctly interpret the findings of these in terms of the modeling tasks of logistics systems.

Expected Learning Outcomes

Ability to compar and select the alternatives in terms of risk to the supply chain
Ability to use method of decision tree for risk management in supply chains
Ability to use methods and models of risk redistribution to the supply chain
Ability to use methods and models of risk diversification in the supply chain
Ability to use risk management in the supply chain on the basis of insurance
Ability to use risk management of financial leverage in the supply chain

Course Contents

Topic 1 Selecting the best solutions in terms of risk in supply chain management Topic 1.1 Comparing the alternatives in terms of risk to the supply chain
Risk as an economic category. Model representation of risk: pure risks; soft and hard risks when analyzing supply chains; commercial risks. The concept of "income-risk", the concept of "yield-risk." The need for other approaches to the evaluation and assessment of risks in the supply chain: the format of the concept of expected utility. Interpretation and application in relation to the economic problems of risk management in the supply chain. The problem of comparing alternatives. The concept of the unit of level lines in the format of the classical approach of risk theory. The formal definition of the level lines. Features comparison of risky alternatives in the space of "Income-risk"; specificity of their comparisons in space "Yield-Risk." Accounting for decision-makers to the risk of the relationship: the notion of equivalence of curves and indifference curves. Formalization of procedures for the comparison of alternatives in terms of risk. Parametric representation of the level lines. Features of the level lines that are due to the risk attitude of the decision maker. The specifics of the decision-making in risk manage-ment in the spaces "Income-risk" and "risk-yield". Classification of DM with the attitude to risk. The ability to compare alternatives in the format of the concept of utility. The concept of the utility function. The main properties of the utility function and the probabilistic interpretation. At-tributes comparison of alternatives, determines convexity / concavity of the utility function. Fea-tures and specificity of the experimental measurement of utility in the format of risk manage-ment models for supply chains.
Topic 1.2 Method of decision tree for risk management in supply chains
The general scheme of the method of decision tree. Features of its implementation for the tasks of risk management in supply chains, formulated in an expanded form: their formalization based on the decision tree. Procedure for constructing decision tree. Procedure for assigning parameters of the decision tree. Analysis on the basis of a decision tree: convolution procedure and blocking. Choosing the best solutions in the space of "Income-Risk" in the modeling of the supply chain. EVC - cri-teria (expected value). Feature of his level lines and use format. MVC - criteria (significant variance): the possibility of taking into account the specifics of the decision-maker attitude to risk. The concept of "risk-free equivalent income" in the format of the final result in the optimization of alternative supply chain. The possibility of other approaches to the formalization of criteria / selection functions in the optimization of solutions in terms of risk to the supply chain. Solutions in the format of the concept of utility. EUC-criteria (expected utility). Risk premium and the "risk-free equivalent income" in the format of EUC-criterion. In-terpretation and application of optimization problems in supply chains. Features of the implementation procedures of the convolution in the various selection criteria or opti-mization decisions under risk: EVC-test format; MVC-test format; format of EUC-criterion. The specificity of these procedures for terminal fragments of the decision tree. Features such procedures for the inter-mediate fragments. Choosing the best decisions based on the relationship to the risk of DM. Accountability of additional features / options offered by the market, for modifications of the models to optimize the supply chain in terms of risk-based decision tree.
Topic 2 Methods of risks dissipation in supply chain management Topic 2.1 Methods and models of risk redistribution to the supply chain
Possibility of redistribution of risk in the optimization model of supply chain management. Redistribu-tion of risk based on changes in contractual conditions of supply. Redistribution of risk based on changes in ownership interests in the related logistics processes, in particular, taking into account the involvement of logistics intermediaries. Formalization of optimization solutions based on methods of risk transfer. To use the machine level lines and the indifference curve in the space of "Income-Risk" or space "Yield-Risk" for finding optimal solutions. Model of risk redistribution in a format specific business proposals in the supply chain: 1) model to give rise to an unacceptable risk; 2) the model result of the absence of adequate finan-cial resources. Model of risk redistribution problems as a special case of models of risk diversification in the supply chain.
Topic 2.2 Methods and models of risk diversification in the supply chain
The concept of risk diversification on a content / verbal level. The nature and attributes of the proce-dures diversification of economic risks. Removable and systematic risks. Portfolio strategies and their for-mal representation. The most basic model of risk diversification in the format of two business proposals. Accounting perfect negative correlation in the format of such models of diversification of risk: the risk-free opportunity to implement appropriate risk proposals; graphic interpretation in space "Income-Risk" and in the space of "yield-risk." Accounting perfect positive correlation in the format of such models of diversifi-cation of risk: the risk-free features of the implementation of risky proposals, graphic interpretation. Mod-els of risk diversification, suggesting that one of the proposals of business is risk-free; specificity of their graphical representation in the space of "Income-Risk" and in the space of "yield-risk." Generalization of models of risk diversification, involving an arbitrary number of assay format offers business. Features of optimal portfolio strategies: the effective boundary of admissible portfolios. The optimal market portfolio. The capital market line (CML - capital market line) and submitted it possible compromise between the in-crement of risk and yield increment. Market price of risk. Line of the securities market. The concept of the coefficient of "beta". Properties factor "beta". Interpretation of the coefficient of the "beta" as a measure of risk. The possibility of optimizing decisions under risk based on the use of the coefficient of "beta".
Topic 3 Methods of anticipation risks and avoidance from them in the management of supply chain Topic 3.1 Risk management in the supply chain on the basis of insurance
"Synergistic effect" in the format of procedures for risk diversification of the insurance company with an increasing number of its customers. Attributes of the insurance contract. The ability to manage risk in the supply chain by using the suggestions of the insurance market. The specifics of contract proposals in the insurance market that allow you to manage risk in the supply chain through the use of diversification opportunities. Basic models of formalization of risk-free strategy based on the use of insurance contracts. Insurance model based on the relationship to the risk of DM. Various aspects of security risks: Select the type of insurance contract with supply chain management on the basis of a decision tree. Model to achieve the desired result for the "risk-free equivalent" yield.
Topic 3.2 Risk management of financial leverage in the supply chain
The concept of the effect of financial leverage on a content / verbal level. Formalization of the concept of risk of financial leverage: the specificity of the decisions in the format criteria MVC; singularities of solutions in the format criteria MVC. Accounting model the cost of borrowing in the analysis of the ef-fect of financial leverage. Selecting shoulder leverage at financial risk management models leverage optimization problems in supply chains.

Assessment Elements

Activity (Work on seminars, аnalitical note and other homeworks)
The analytical note is addressed to the head of the business and should not contain any educational expressions and designations. The note is drawn up as a memo at work. Assessment criteria by analyte. note match the criteria for evaluating homework. Homework: No more than 7 - the problem is solved on abstract data Not more than 8 - if all the requirements are met, there are no claims to the content and design. Not more than 9 - if there is a modification of the approach (method) from teaching materials. 10 - if the author’s unique approach (algorithm) is developed. In case of violation of the deadline, the assessment (according to the analytic note) cannot be higher than 4.
nothing myst be here
Exam
The examination is conducted in writing using asynchronous proctoring. The exam is conducted on the StartExam platform. You must connect to the exam 15 minutes before the scheduled start time. The student's computer must meet the following requirements: https://eduhseru-my.sharepoint.com/:b:/g/personal/vsukhomlinov_hse_ru/EUhZkYaRxQRLh9bSkXKptkUBjy7gGBj39W_pwqgqqNo_aA?e=fn0t9N) To participate in the exam, the student must: go to the proctoring platform in advance, conduct a system test, turn on the camera and microphone, and verify identity. During the exam, students are prohibited from: turning off the camcorder, microphone; use notes, textbooks, other educational materials; Leave the test site (go beyond the camera’s viewing angle); to look away in a direction that does not correspond to the screen of the computer or the desktop; use smart gadgets (smartphone, tablet, etc.); involve outsiders to help with the exam, and also talk with outsiders while completing assignments; read out tasks aloud. During the exam, students are allowed to: use paper, a pen for taking notes, calculations; use a calculator for calculations. Communication Disruptions. A short-term communication failure during the exam is considered to be a loss of a student’s network connection with the StartExam platform for no more than 1 minute. A long-term communication disruption during the exam is considered to be the loss of a student’s network connection with the StartExam platform for more than 1 minute. Long-term communication failure during the exam is the basis for deciding to terminate the exam and giving a rating of “unsatisfactory” (0 on a ten-point scale). In the event of a long-term communication failure with the StartExam platform during the exam, the student must notify the teacher about this, record the fact of losing the connection with the platform (screenshot, response from the Internet provider) and contact the training office with an explanatory note about what happened to decide on retake the exam.

Interim Assessment

Interim assessment (4 module)
The exam consists of a written part (1 academician hour) and an oral part (they are held on the same day). When setting the final grade for an exam, the grades of these two indicated parts / steps are taken into account with equal weights. At the same time, to encourage more active work, both in the study of discipline and in work related to the possible use of the materials presented in the format of scientific research, the following is practiced. The partially oral stage of the exam can be counted even before it begins (as a result of the learning process, which is correlated with answers to special questions, as well as with specially completed tasks or developments close to the scientific ones, for example, which caused the student to speak at a scientific conference, etc. ) The mandatory attributes of such procedures associated with the partial offset of the oral part / stage of the exam include the following conditions. 1) They must be open, i.e. not only a specific student is informed about this, but an announcement is made for the entire group of students or the entire stream. 2) They must be specific, i.e. at the same time, it will certainly be clarified which part related to the oral stage of the exam will be counted; 3) They should be available to every student who wants to use this format of training procedures. The following changes are made to the quarantine period for distance learning. 1) The examination is carried out in writing on the basis of developed test questions through the Startexam system (the volume of such questions will be designed for a duration of 2 academic hours.). 2) The previously noted possibility of partial reading of the stage of the oral exam before it begins for the period of distance learning is canceled. The conclusion of the assessment will be implemented according to the following formula: Oresult = 0.4 * Activity + 0.6 * (score for exam testing). Activity - the arithmetic average of the work in synchronized classes and homework, including an analytical note.

Bibliography

Recommended Core Bibliography

Elements of financial risk management, Christoffersen, P. F., 2003

Recommended Additional Bibliography

Financial institutions management : a risk management approach, Saunders, A., Cornett, M. M., 2018
Heiko A., Vennemann C. R., & Darkow I. L. (2010). Corporate foresight and innovation management: A portfolio-approach in evaluating organizational development. Futures, 42(4), 380-393.
Kaminsky, K. (2010). Financial Literacy : Introduction to the Mathematics of Interest, Annuities, and Insurance (Vol. 2nd ed). Lanham, Md: UPA. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=619930
Minh-Thu Tran-Nguyen, Le-Diem Bui, & Thanh-Nghi Do. (2019). Decision trees using local support vector regression models for large datasets. Journal of Information and Telecommunication, (0), 1. https://doi.org/10.1080/24751839.2019.1686682
Rachev, S. T., Fabozzi, F. J., & Stoyanov, S. V. (2008). Advanced Stochastic Models, Risk Assessment, and Portfolio Optimization : The Ideal Risk, Uncertainty, and Performance Measures. Hoboken, N.J.: Wiley. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=219812
Smirnov Alexander D. (2018). Stochastic Logistic Model of the Global Financial Leverage. The B.E. Journal of Theoretical Economics, (1), 1. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsrep&AN=edsrep.a.bpj.bejtec.v18y2018i1p20n3

Course Syllabus