Supply Chain Risks
It's important, now more than ever, to ensure that your company has assessed all of the potential supply chain risks it faces.
According to recent claims reviews by leading bodies, global supply chains are increasingly more likely to claim for higher and more severe business interruptions than four years ago. This increase has not gone unnoticed by many insurers and highlights the ever-growing need to assess the supply chain risks your company may face.
Unusually, the reason for this claim increase may actually come from smoother and more integrated supply chains. Whilst previously a fire or other business interruption may have only affected one area of a business in isolation, nowadays entire sectors can fall victim to these issues.
Although an integrated supply chain may help your business run like a well-oiled machine, it can also mean that supply chain risks may create more of a ‘knock-on’ effect further down the line. This is especially the case for businesses that have a concentration of important business components in one area, as this often creates a higher concentration of risks.
These investigations show that businesses in the energy sector were most likely to suffer due to poorly assessed supply chain risks.
This is in part because of the move to onshore factories and also down to ever increasing interconnections between different areas of a business. Nonetheless, modern supply chain risks are a serious threat to all companies, regardless of sector.
It has also been revealed that over 88% of insurance claims from businesses were originally down to human error, rather than natural causes such as flooding or storms.
However, even known problems and natural disasters are likely to cause huge setbacks for your company if there are no sensible procedures put in place to combat each of these threats.
Below are some of the biggest supply chain risks faced by modern global businesses today.
Between 2010 and 2014, the top ten causes of loss for businesses globally included:
- Explosions and fires
- Heavy storms
- Breakdown of machinery
- Faulty building design and manufacturing
- Rioting and vandalism
- Cast loss
- Flooding
- Collapse of buildings
- Human and operating errors
- Power interruption
Armed with this knowledge, businesses can begin to understand the importance of not only streamlining their supply chain but assessing the modern day risks that come with it too.
Better supply chains often come with bigger risks. Therefore, you must ensure you have taken to necessary precautions to minimise damage and loss, whilst maximising company growth.