Supply chain fears increase as international business activity heats up: Chubb

DENVER, Colo. – Supply chain failures, data breaches and political instability are among the issues weighing on the minds of executives for businesses in the United States and Canada with plans to expand operations overseas this year, notes new survey results released Tuesday by the Chubb Group of Insurance Companies. 

Representing the top overseas business threat, supply chain failure was cited by 19% of respondents to the 2014 Chubb Multinational Risk Survey, released at the RIMS 2014 Annual Conference & Exhibition in Denver.

The findings are based on a survey of 300 senior executives, conducted by JLA Strategic Research, an independent public opinion and market research firm.

Rounding out the top four issues for respondents are a data breach/cyber event, cited by 15%; government/regulatory investigation and political instability, 13% apiece; and natural catastrophe, 12%, notes a statement from Chubb.

The survey also found 52% of surveyed businesses plan to increase overseas activity in 2014, 27% of respondents expect to increase overseas travel, 27% expect to introduce new products in foreign markets, and 26% expect to increase employee headcount abroad. 

As companies large and small “expand their international business operations, companies need to take a more holistic or global approach to managing risk,” says Kathleen Ellis, senior vice president and worldwide manager for Chubb Multinational Solutions. “They increasingly are being confronted by political and economic turmoil, natural and man-made disasters, and regulatory hurdles.”

Although supply chain failure ranked as the top concern, Chubb reports just 56% of polled companies have a business continuity plan that addresses overseas risks, and 22% of companies with a plan have never tested it.

Ellis regards the lack of business continuity plans and testing as disturbing. “Companies are left exposed to significant supply chain failures and associated business interruption costs that can undermine their financial results and stability,” she cautions.

Further, companies must assess if “their overseas suppliers and vendors also have up-to-date, well-tested business continuity plans,” she advises.

However, just 40% of respondents reported their companies require their overseas suppliers and vendors to have a business continuity plan.

Other survey findings include the following:

• 45% of the executives surveyed said overseas risks pose a greater threat to their company than domestic ones;
• 48% of polled companies had experienced at least one loss related to conducting business overseas over the last three years;
• 69% of companies have employees who travel outside the U.S. and Canada on business;
• only 57% of polled companies provide emergency medical care or evacuation assistance to those employees;
• 63% of the firms surveyed have social media policies that extend to overseas employees; and
• 72% of surveyed companies allow employees to use their own mobile devices – such as smartphones, tablets and laptops – for work.

“With many employees travelling outside the U.S. and Canada, more mobile devices, often with proprietary company information, are at risk of being lost or stolen,” Ellis warns.

But recognizing the threat, 82% of companies require at least one security feature on mobile devices used for work, including password protection (75%), encryption (53%) and the ability to remotely wipe clean the device (39%).