Sourcing from low-cost countries (LCCS) introduces specific and heightened risks due to differing regulatory, social, and political environments. Reputational risks are significant, as organisations can be associated with unethical practices in their supply chain, such as poor labour standards or environmental damage, which can severely harm their brand image. Geopolitical risks are also a primary concern, stemming from potential political instability, changes in trade policy, tariffs, or unforeseen government interventions in the source country. These factors can lead to severe supply chain disruptions and are characteristic challenges of operating in many low-cost sourcing destinations.

A. operational risks: While operational risks like longer lead times and quality control exist, they are a general feature of any extended supply chain, not a risk uniquely pronounced by LCCS compared to reputational and geopolitical threats.

D. financial risks: The primary driver for LCCS is financial gain (cost reduction). While risks like currency fluctuation exist, they are inherent to all international trade, and the most defining risks of LCCS are non-financial.

1. CIPS Official Course Book

L5M2 - Managing Supply Chain Risk. The syllabus and official texts for this module extensively cover the unique risks of global sourcing. The PESTLE (Political

Economic

Social

Technological

Legal

Environmental) analysis framework is often used to categorise these external risks. 'Political' factors directly correspond to geopolitical risk

while 'Social' and 'Environmental' factors are primary drivers of reputational risk

especially concerning Corporate Social Responsibility (CSR) failures in LCCS. (Note: Specific page numbers vary by edition

but this is a core concept in the global sourcing and risk categorisation chapters).

2. Christopher

M. (2016). Logistics & Supply Chain Management (5th ed.). Pearson. Chapter 8

"Managing Risk in the Supply Chain

" discusses how global sourcing extends supply chains and exposes them to higher levels of risk

specifically highlighting political and social volatility as key concerns that can lead to reputational damage and disruption.

3. Manners-Bell

J. (2017). Supply Chain Risk Management: Understanding Emerging Threats to Global Supply Chains (2nd ed.). Kogan Page. The book details various categories of supply chain risk

with dedicated analysis of geopolitical threats (e.g.

trade policy

instability) and reputational risks arising from CSR and ethical sourcing failures

particularly in the context of sourcing from developing economies. (See Chapter 3: 'Geopolitical threats to supply chains' and Chapter 6: 'Corporate social responsibility').