We study sourcing decisions of firms in a multi-tiered supply chain when procurement is subject to
disruption risk. We argue that the presence of non-convexities in the chain (e.g., due to non-convex
production technologies or financial constraints) may create a wedge in the sourcing incentives of firms at
different tiers, leading to the formation of potentially inefficient supply chain networks. More specifically,
we provide a characterization of whether and how non-convexities in upstream firms' production
technologies may induce them to adopt sourcing strategies that are sub-optimal from the points of view of
firms further downstream. Our analysis highlights that strategies focusing on optimizing procurement
decisions in each supply chain tier in isolation may not be sufficient for mitigating risks at an aggregate
level. Rather, a thorough understanding of the entire structure of the supply network is necessary to
properly assess and secure against disruptive events.