Emerging Supply Chain Risk of 2012

Emerging Risk
Supply chain interruption cannot be considered as an emerging risk anymore, but it is rapidly evolving in terms of its scope, the level of suppliers affected and what causes it.

Recent events in  New ZealandJapan and Thailand have helped increase awareness of the business interruption implications from the loss of key suppliers, but it’s no longer only the security of your major tier one suppliers that’s an issue… companies need to look further down the food chain to tier two suppliers and beyond.

A recent survey by the Business Continuity Institute found that 40% of analyzed disruption originated below the immediate supplier from the network of thousands of smaller interdependent suppliers.

The survey provided a revealing analysis on the deep-rooted sources of supply chain failure. Respondents from across 62 countries revealed that 85% of organizations recorded at least one supply chain disruption in 2011.

What is really interesting in terms of emerging themes is the type of cause or initial peril that leads to a loss of productivity at both upstream and downstream sites. Whilst adverse weather conditions are recorded as the principle cause, outage of IT or telecommunication systems coupled with cyber attack are beginning to emerge as strong contenders particularly in the financial services, government and IT and comms sectors.

Evidence is showing that this issue can only get worse: senior management teams need to ensure that balanced risk management solutions are in place that will bring together supply chain and business continuity management techniques and will ultimately help reduce future impacts on brand and reputation.

This post was part of the special feature about What Risks Will Emerge in 2012? published January 24, 2012. The feature also covered emerging risks in these other fields:
Employee Safety
Environmental Liability
Financial Institutions
Health Care
Life Sciences
Political Risk
Power & Utilities
Renewable Energy
Trade Credit

About Tom Teixeira

Tom is the London-based Practice Leader, Integrated Risk Management, where he focuses on aerospace, oil and gas, mi…
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