Risk Assessment in Supply Chain Networks of China-Pakistan Economic Corridor (CPEC)

Complexities in today's Supply Chain Networks (SCN) have exposed them to various risks, vulnerabilities, and disruptions. Recently, the Chinese $62 billion investment in the wake of the China-Pakistan Economic Corridor (CPEC), which includes a network of highways and railways projects, will be a milestone for regional connectivity. Through CPEC, China aims to connect its north-western province Xinjiang to global supply chain networks via Gwadar port Pakistan. Since 9/11, Pakistan has become a terrorism stuck state, resulting in the loss of political and economic stability, reducing the infrastructure development and Foreign Direct Investment (FDI). Under these circumstances, risk assessment of supply chain networks in a responsive way toward these problems is crucial for authorities. This paper aims to identify and investigate the relationship between supply chain risks using the Interpretive Structural Modelling (ISM) technique. Additionally, interdependencies among risks have been calculated, and classification is done via cross-impact matrix multiplication applied to classification (MICMAC) analysis based on corresponding dependency and driving power. Results show that political and economic stability has the highest driving power and lowest dependence power, indicating that all the risks are directly or indirectly associated with it. Simultaneously, epidemics and ecosystem changes have the highest dependence power and most insufficient driving power, which shows its significant dependency on other risks. Finally, based on our model, authorities can design a resilient supply chain network responsive to several risks, and efficient operations are assured.