Combining VaR and MtT Type Risks

Supply chains are constantly exposed to multiple VaR and MtT type risks. Hence, these risks have to be combined and assessed for risk management and mitigation. For example, an OEM may be interested in assessing the total VaR or MtT type risk posed by a particular overseas supplier or in a given geographic region. This could be used as additional criteria for supplier selection. 

In this section, we shall discuss how to combine the various risks for managerial decision making, in the context of supplier risk management. In particular, we shall discuss three different ways to combine VaR and MtT type risk of suppliers as follows  

Combine different VaR or MtT type risks from the same supplier 

Combine the same VaR and MtT type risks from different suppliers 

Combine the total VaR or MtT type risk from all suppliers 

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