Tag Archives: Supply Chain Disruption

FM Global: New Tool Helps Execs Manage Supply Chain Risk

Why are some countries more resistant to supply chain disruption or better able to bounce back?

According to Margareta Wahlström, United Nations Special Representative of the Secretary-General (SRSG) for Disaster Risk Reduction, this is a puzzle that world leaders are perpetually trying to solve.

Hence the inherent value in a new online interactive tool from FM Global that ranks countries by supply chain resilience.

The 2014 FM Global Resilience Index ranks the business resilience of 130 countries around the world.

Nine key drivers of supply chain risk are grouped into three categories: economic, risk quality and supply chain factors. These combine to form the composite index. Scores are bound on a scale of 0 to 100, with 0 representing the lowest resilience and 100 the highest resilience.

Jonathan Hall, executive vice president, FM Global, explains:

Natural disasters, political unrest and a lack of global uniformity in safety codes and standards all can have an impact on business continuity, competitiveness and reputation. As supply chains become more global, complex and interdependent, it is essential for decision makers to have concrete facts and intelligence about where their facilities and their suppliers’ facilities are located.”

So which countries rank at the top of the index?

According to FM Global, Norway (score: 100), Switzerland (score: 98.9) and Canada (score: 93.2) are the top three countries most resilient to supply chain disruption.

At the other end of the scale, the index finds Kyrgyzstan (score: 6), Venezuela (score: 2.5) and the Dominican Republic (score: 0) as the countries least resilient to supply chain disruption.

Where did the United States fall?

Because of its geographic spread and disparate exposures to natural hazards, the U.S. is divided into three separate regions. All three rank in the top 25.

You might also be interested to know that China (also divided into three separate regions) ranks in the top 75. China’s weakest region includes Shanghai and ranks particularly low as a result of poor risk quality due to acute natural hazards.

Another key takeaway is the biggest riser: Bosnia and Herzegovina. The country climbed 19 places from last year, due to improvements in its political risk and in the quality of local suppliers.

And one of the top fallers in the 2014 Index is Bangladesh, with FM Global citing declining quality of both natural hazard risk management and fire risk management.

FM Global commissioned analytics and advisory firm Oxford Metrica to develop the rankings. The index allows you to browse country rankings and scores from 2011 to 2014.

Marsh: Cyber Risks Are Not Just About Data Breaches

Supply chain and operational disruptions from cyber attacks may be a more severe potential threat to businesses than data and privacy exposures, according to a new report from Marsh.

In its latest risk management research briefing, Marsh notes that technology outages and software failures resulting in supply chain and operational disruptions can cause significant loss of income, increase operating expenses, and damage an organization’s reputation.

Marsh  suggests businesses may be overlooking this threat and says the  risk of an IT outage or software failure needs to be managed and addressed not just with insurance, but in a well-planned and effective risk management program.

The good news is that although cyber insurance policies have historically been triggered primarily by data breaches and hacking attacks, many now provide coverage for a broad range of technology failures and outages.

But Marsh adds that the purchase of cyber insurance should be just one part of a well-planned and effective risk management program that also includes policies and protocols to prevent and mitigate technology risks.

If unplanned, information technology (IT) outages are the most debilitating source of supply chain disruption, affecting 52 percent of companies responding to the Business Continuity Institute’s Supply Chain Resilience 2012 report.

In fact, IT outages outpaced all other sources of supply chain disruption, including severe weather events, transportation disruptions, and product contamination.

Business Insurance has more on this story.