We call Supply Chain Matters reader attention to a recent posting on Insurance Networking News regarding the Top 10 U.S. Business Risks for 2014. The report highlights findings from insurance provider Allianz and its Allianz Risk Barometer report, a survey among 400 corporate insurance experts from 33 countries.
Readers will recall that in Prediction Seven of our 2014 Predictions for Global Supply Chains, we stated that increased dimensions of supply chain risk and major disruption will further impact product sourcing strategies. This latest Allianz survey provides added evidence of both the increased dimensions of risk as well as the interdependencies of a disruption on the other important aspects of business including the value of the brand. It specifically calls attention to the increasing complexity and interdependence of business risks adding broader systemic threats for businesses. While the report highlights is a ranking business risks from a U.S. perspective, it further notes that notes that globally, business interruption and supply chain losses provide the greatest risks to businesses. That finding should be of little surprise to readers of Supply Chain Matters.
In its top ten rankings of U.S. business risks, business interruption caused in the supply chain was ranked as the number one risk by 61 percent of respondents. Rounding out the top five risks were natural catastrophe as number 2, fire/explosion at number three, and cyber-crime and IT failure as number five. Loss of brand reputation joined this list for the first time, and was ranked as the number four risk. That ranking, by our view is long overdue. While 2013 losses associated with natural catastrophe were considerably down from the levels of 2012, they were more costly in terms of business interruption.
Strategic sourcing and procurement teams need to continue to calibrate with their insurance and corporate risk colleagues as to the implications of these ongoing trends and the increased exposures that major supply chain disruption can present to any business. This is an area that can no longer be viewed as a passing trend.