Risk investigation in circular economy: a hierarchical decision model approach

Abstract

ABSTRACT Integrating circular economy practices into the conventional supply chain is a challenging task due to the sheer number of risks and uncertainties involved. These risks can hamper the functioning of recovery processes and act as impediments to the adoption of circular systems. Furthermore, there is a scarcity of studies focusing on the risk aspects in the context of the circular economy. This study attempts to address this gap in the literature by identifying the risks associated with circular economy operations and proposing a taxonomy for the same. Furthermore, a risk hierarchical decision model is developed to determine the relationships among the risks and differentiate between driving and dependent risks. A two-phase approach, kappa statistical analysis and interpretive structural modelling, is used to validate the proposed taxonomy and understand the risk interactions. The study statistically categorises the circular economy risks into different categories and scientifically evaluates the interdependencies among the risks. Unlike conventional perception, majority of the high-priority risks are organisational rather than financial in nature.