A Fundamental Approach to Facilities Location Risk Assessment and Its Relevance to Supply Chain Network Design: Using the Thai Floods of 2011 as an Example

Managing risk in supply chains and facilities location is an important topic. The majority of previous work focusses on inherent risk of disruption within the supply chain. There is less attention paid to the risk of catastrophic events affecting the supply chain, through disruption of one or more facilities. Flooding in Thailand during 2011 had a multi-billion dollar economic impact. This was partially through an under-estimation of the risk flooding posed to the facilities. In many cases simulation of natural disaster impact on a facility location may be the way forward. This paper however proposes a fundamental approach to facilities risk assessment in reference to natural disasters. It suggests four key sets of information can help define the main risk in a timely and economic manner. These are; geolocation, historical data, weather patterns and anthropogenic impacts. This approach will then provide greater confidence in going forward with more detailed analysis of the identified risk. The Thai floods of 2011 are used as a test of the method. The fundamental approach clearly identifies risk of flood as worthy of detailed simulation.