Space threat to supply chains

17 September 2013

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18 September 2013 | Marino Donati

Space debris, solar storms, cyber attacks and climate change are an increasing threat to businesses and their supply chains, according to a study.

A report, published by global reinsurance firm Guy Carpenter, has highlighted the major emerging insurance risk factors relevant to businesses and their supply chains.

Threats to the data security of cloud computing and social media has become a significant emerging risk with the instances of cyber attacks reaching “alarming levels”, the report said.

As supply chains become more reliant on technology, they have become more vulnerable to cyber threats. According to the report, technology failure and cyber attacks represent a greater threat to most organisations than adverse weather, fire and social unrest combined.

The report stated: “Given the growing loss potential from supply chain risks, companies need to ensure they understand their supply chains and offer all data to their insurers.”

Major solar disturbances have the potential to severely disrupt electricity supply, cause satellite damage and trigger GPS signal disturbance. This would cripple critical infrastructure, including transportation and fuel supplies, and global supply chains would likely fail.

More satellites and debris in space are increasing the risk of collisions. This could damage infrastructure used to provide vital services and technology, such as global communications, air traffic control, weather forecasting and disaster management. A significant disruption to communities and businesses around the world could result, the report predicts.

Flooding is the biggest risk factor associated with global warming. Coastal cities already vulnerable to flood face an increasing threat, while lower rainfall could lead to water shortages in some areas. The wildfire season has also been steadily increasing, the study notes.

David Flandro, global head of business intelligence at Guy Carpenter, said: “We are observing the rise of many new risks as technological, economic and scientific advancements are made, meaning there is often precious little historical data available for modelers and underwriters to utilise.

“Only by analysing and seeking to better understand these risks can we mitigate the element of surprise posed by emerging risks and identify potential growth opportunities.”

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