UK businesses said that they felt less prepared for geopolitical in a survey conducted by the insurer Beazley.
Its Risk and resilience survey found that confidence in resilience against war and terror dropped between 2021 and 2022. For example, 42 per cent of real estate respondents said they were resilient in those areas in 2021 compared with 28 per cent in 2022. But overall perceived resilience fell across the board. In fact, 10 per cent fewer businesses felt ‘very prepared’ for war and terror, and 8 per cent fewer for economic risks.
Head of political risks and trade credit Roddy Barnett said businesses must invest in better risk management backed up with insurance.
Supply chains have come under increasing pressure because of sanctions against Russia. But more trouble is likely to follow.
For example, China has worked to move supply chains away from sea lanes controlled by the US. Its Belt and Road Initiative replaces these traditional routes with land-based supply chains and new relationships with alternative ports.
“The danger is that China increasingly has the naval and commercial power to conduct trade by hopscotching from port to port,” according to a recent article in Supply chain brain. That could mean that in future conflicts the US and its allies have little power to impose sanctions.
Even though the US has responded by, for example, increasing onshore production of computer chips – it is still dependent on imports for chips and raw materials.
The Interos Resilience survey 2022 found almost two in three (64 per cent) businesses making wholescale changes to supply chain structure. In addition, 77 per cent will introduce new technology to improve the visibility of their supply chains.
It is easy to see why. Companies surveyed suffered an average loss of $182 million because of supply chain disruption. In addition, while three-quarters said they suffered disruption beyond tier two in the chain, only half of respondents knew when that happened.
“A resilient enterprise has the capacity to overcome disruptions,” said IRM supply chain expert Gregory Schlegel.
“Organisations need to embrace and embark on a strategic risk journey before it’s too late and a risk event takes place. The first step in your journey is to get educated. Then you and your team will have the agility and right skill set to handle complex interconnected supply chain risks,” he said.
Click here for information on IRM’s Supply Chain Risk Management Certificate.