TITLE:
Network Analysis for Systemic Risk Assessment in Supply Chains: A Cross-Disciplinary Framework Integrating Financial Contagion Models
AUTHORS:
Omoshola S. Owolabi
KEYWORDS:
Supply Chain Resilience, Systemic Risk Assessment, Network Vulnerability Analysis, Financial Contagion Modeling
JOURNAL NAME:
Journal of Data Analysis and Information Processing,
Vol.13 No.3,
August
28,
2025
ABSTRACT: This research develops a novel cross-disciplinary framework that bridges financial systemic risk modeling with supply chain network analysis to advance resilience assessment and policy guidance. The approach integrates established financial contagion frameworks with the topology of the supply chain network, introducing the concept of “too central to fail” suppliers through systematic importance scoring methodologies. The framework reveals striking asymmetries in supply chain vulnerability patterns. While the majority of suppliers demonstrate systemic importance within network structures, financial fragility analysis indicates remarkable overall network robustness, with minimal nodes exhibiting high vulnerability thresholds. Most significantly, comprehensive stress testing exposes a critical paradox: networks demonstrate moderate resilience to random disruptions yet remain substantially vulnerable to strategic targeting of central nodes. Cascade failure analysis through multiple simulation approaches unveils the dual nature of supply chain risk propagation. Random shock scenarios generate manageable failure rates, while targeted attacks on high-centrality suppliers achieve disproportionate network impact. Most alarmingly, liquidity crisis simulations demonstrate how financial contagion mechanisms can affect nearly half of all network participants, highlighting the interconnected nature of operational and financial vulnerabilities. These findings establish quantitative foundations for the assessment of systemic risk in supply chains, with immediate implications for regulatory frameworks, early warning systems, and resilience enhancement strategies. The integrated financial-operational risk framework advances the theoretical understanding of the propagation of cross-sector vulnerability while providing systematic methodologies for identifying critical suppliers whose failure could trigger systemic collapse.