24. The Paradox of Risk Management: A Supply Management Practice Perspective

How are risks managed in organizations? A conformist answer to this question is that all the plausible risks are first identified, then assessed and finally mitigated or treated. Grounded on a single in-depth case study of a leading global manufacturing organization and anchored in David Whetten’s framework for theoretical contributions, this chapter reveals that risk management in practice is not as holistic, single-level and time-independent activity as it is presumed to be in the theory and widely referred to standards. The findings suggest that different risks are managed using a multitude of methods during diverse activities within the supply management process by different personnel positioned at various hierarchical levels of the organization. Consequently, this paper contributes to an alternative understanding of risk management, referred to as the paradox of risk management which is a fragmented, multilevel and time-dependent process. Though this chapter draws on a single case of a large global organization and reveals risk management from the supply management practice perspective, the results may plausibly be valid for other large organizations operating in the supply chain context. As a result, this paper is expected to support the research community in developing practically rational models as well as provide assistance to managers of large complex organizations in forming a holistic understanding of supply chain risk management.