Loose Chains
Supply chains continue to garner headlines, yet rarely for positive reasons. One loose link can have serious repercussions for manufacturers, retailers and commercial enterprises.
The COVID-19 pandemic exposed vulnerabilities in many supply chains, particularly the reliance on a single supplier or region. Today's international supply chains are strained by numerous factors including geopolitical tensions, cyber risks, port congestion, warehouse shortages, extreme weather events, and unforeseen ‘black swan’ events.
Wayne Imrie, Head of London Market Wholesale Executive Risks
Despite today’s heightened risk environment, our Risk & Resilience research1 reveals global business leaders’ concerns around supply chain instability continue to decline since a peak of 31% in 2021[i], with just 18% regarding this risk as their leading business concern.
However, while concern has dropped, a quarter of the executives surveyed feel their business is unprepared[ii] for supply chain instability and disruption. In addition, 23% of the firms surveyed planned to increase the agility of their supply chain this year, but this is a significant decline since 2023[iii] where 35% of business leaders planned to do this. Begging the question is supply chain a potential blind spot for businesses?
So called ‘black swan’ events, such as the Baltimore Bridge collapse, can cause a severe and unexpected impact for many businesses. The impact of this tragic accident resulted in the 4,000 commercial trucks that used the bridge each day being rerouted2, leading to supply chain issues, increased delivery times and costs for many businesses.3
The unpredictability of ‘black swan’ events, whether a result of accidents, geopolitical issues or conflict, cyber-attack or extreme weather, expose gaps in supply chain risk management and scenario planning.
Over 80% of the world’s goods are transported by sea, and the volume of sea freight more than doubled between the 1990 and 2021.4 Highlighting the importance of marine cargo to world trade.
As global freight volumes rise, port congestion and pressure on warehousing facilities also increase. The resulting delays in port entries and exits put further strain on warehouse supply, and leads to route diversions and changes to standard port operations. This chain of events will impact supply chains and potentially result in inventory shortages and higher costs due to delivery delays and increased freight costs.
Kelly Malynn
Maritime Cyber Physical Damage Product Leader
Wayne Imrie, Head of London Market Wholesale Executive Risks
Florian Beerli, Head of Specialities & US Programs and Focus Group Leader – Product Recall
[1] beazley.com/en-US/news-and-events/spotlight-on-boardroom-risk-2024/methodology/
[2] https://www.oxfordeconomics.com/resource/the-economic-costs-of-the-key-bridge-collapse/
[3] https://www.oxfordeconomics.com/resource/the-economic-costs-of-the-key-bridge-collapse/
[4] Container shipping - statistics & facts​ | Statista
[i] In 2021 the survey was undertaken with 1,000 respondents based in the UK and US only.
[ii] ‘Not very well’ and ‘not at all’ prepared answers combined.
[iii] The 2023 research was undertaken in January with 2,000 executives based in the UK, US, Canada and Singapore of varying sizes, operating in 9 broad industry sectors with international operations.
