Supply chain disruption biggest worry for executives

30 January 2013
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30 January 2013 | Adam Leach

Disruptions to the supply chain, natural catastrophes and fires or explosions will be the main risks keeping senior executives awake in 2013.

The Risk Barometer 2013 published this week by Allianz, identified business interruption and supply chain disruption as the business risk of most concern, with 45.7 per cent of respondents highlighting it.

The prominence of disruptive events continued, as natural catastrophes, such as storms or an earthquake, emerged as the second-biggest worry, chosen by 43.9 per cent, and fires and explosions third, with 30.6 per cent.

Paul Carter, global head of risk consulting at Allianz Global Corporate & Specialty (AGCS), said: “The flexibility that provides a modern supply chain with its cost advantages has also created its inherent vulnerability. To improve supply chain resilience many companies consider adding back some redundancy into lean supply chains, even if this reversal of widely used single-supplier sourcing incurs additional costs.”

The findings of the survey, which was completed by more than 500 corporate insurance experts from around the world, suggested concerns over the impact of fire has increased over the past year, selected by 30.6 per cent of respondents compared with just 3.6 per cent in the previous year.

The report cited that in 2012, AGCS clients experienced seven large property losses, exceeding €10 million (£8.5 million), with six of these seven the result of fire. It also cited tragic factory fires in Pakistan in September and Bangladesh in November – both taking more than a hundred lives – as highlighting the serious risk it poses.

The other risks raised in the survey (in descending order) were changes in legislation and regulation (17.1 per cent), intensified competition (16.6 per cent), quality deficiencies (13.4 per cent), market fluctuations (12.6 per cent), market stagnation (12.3 per cent), Eurozone breakdown (12.1 per cent), and loss of reputation or brand value (10.4 per cent).

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