Risk Assessment in the Formation of Virtual Enterprises

A Virtual Enterprise (VE) is considered as a temporary consortium of member enterprises formed to pool their core competencies and exploit the market opportunities. Although a VE has many phases, such as business opportunity identification, formation and partner selection, operation and dissolution. The partner selection phase is considered to be of the utmost importance and care should be taken to assess all the risk factors. This paper examines the partner selection problem by considering three types of risks, individual performance risk, collaborative performance risk and network risk. Based on the information provided by the potentially collaborating enterprises, a mathematical model has been developed for calculation of all three types of risks.