Time to be more risk averse?

LinkedIn +

Television and newspapers have been full of stories of terrorist attacks and aircraft hijackings recently – events that are both horrifying and tragic.

And it would be easy to assume that these have risen to the top of the list of the risks facing supply chains globally.

The BSI’s latest Global Supply Chain Intelligence report In Europe, shows that in 2015 disruptions in trade caused by the ISIS terrorist group clearly highlighted the link between terrorism and the supply chain. Border controls in France following the November attacks in Paris are estimated to have cost the Belgian shipping industry $3.5 million. Terrorist-linked smuggling rings were also identified to be colluding between Spain and the Middle East, the groups illegally transporting shipments of stolen electronics, drugs, weapons and other contraband.

But that is not the full picture – the report also highlights the fact that cargo theft cost almost $23 billion in 2015 – and provides a number of examples. South Africa has seen a 30 per cent increase in cargo truck hijackings over the last year. Vehicle shipment thefts have become increasingly commonplace in China, with a recent series of in-transit vehicle thefts occurring along the G45 highway. In India criminal gangs masterminded new techniques to steal goods without breaking customs seals to avoid detection.

Natural disasters were also a major issue – last year the top five natural disasters caused some $33 billion of damage to business, the report says.

So what will be the biggest supply chain threats this year? Terrorism will continue to be a major issue, and the BSI suggests that global cargo theft will grow by a further $1 billion this year.

But the report also reveals the fact that numerous cases of child and forced labour were exposed in 2015, highlighting the need for visibility in supply chains to mitigate the risk of human rights abuses.

Overall, the picture is of a global environment in which the threats to supply chain operations are, if anything, increasing. Will companies respond by becoming more risk averse, and reducing their dependency on complex extended supply chains? I wouldn’t bet against it.

Click here to download the BSI report.


Share this story: