What is the purpose of using value at risk (VAR) in supply chain risk management?

What is the purpose of using value at risk (VAR) in supply chain risk management?
A . To establish a common language to quantify supply chain risk in terms of currency
B . To prioritize supply chain risks based on their likelihood of occurrence
C . To assess the financial impacts of supply chain risks
D . To measure the effectiveness of supply chain mitigation efforts

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Answer: A

Explanation:

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the purpose of using value at risk (VAR) in supply chain risk management is to establish a common language to quantify supply chain risk in terms of currency. VAR is defined as "a statistical technique used to measure and quantify the level of financial risk within a firm or investment portfolio over a specific time frame"2. VAR can help to estimate the potential loss that a supply chain may face due to various sources of disruption, such as demand fluctuations, supplier failures, natural disasters, or cyberattacks13. By expressing supply chain risk in monetary terms, VAR can help to communicate the risk exposure to different stakeholders, compare the risk profiles of different supply chain scenarios, and allocate resources for risk mitigation13. VAR can also help to link supply chain risk management with corporate financial performance and strategy14.