From Linear Business Models to Circular Business Models: What are the Risks?

Various circular economy aspects have been investigated but understanding regards the risks involved in substituting virgin materials with recycled materials and in transitioning from linear business models to circular ones is still lacking. This work aims to identify, classify and prioritise key innovative circular economy business models risk factors in order to investigate suitable risk management strategies. 24 major innovative circular economy business models risk factors were identified and classified into six categories: market, supply, finance, technical, political and regulatory and others. The probability and impact of the risk factors within industries using glass and carbon fibers were evaluated by relevant experts and fuzzy logic was used to consider the uncertainty associated with human judgement. The risks factors were ranked by calculating their risk scores and from the 24, ten were identified as the top-risks. Take-back systems was evaluated as the main risk for innovative circular economy business models while market risks were assessed as being a significant source of risks due to potentially low customers' acceptance of the products. This research is the first to address the risk factors for circularity and contributes to the field of circular economy by providing an extensive list and classification of risk factors for innovative circular economy business models, which can serve as a reference both for academics and practitioners. By evaluating such risk factors within the specific context of composite materials, it highlights the critical risk factors to be embedded in the economic assessment of innovative circular business models for the composite sector, which will likely be generalizable to other industry sectors. It also offers insights for practitioners and policymakers, in the transition from linear business models to circular business models, by highlighting the key perceived political and regulatory risks.