Financial failure number one risk for global supply chains: Aon

Financial failure is the greatest risk facing global supply chains according to 75% of companies surveyed in Aon and State of Flux’s 2009 Risk in 21st Century Supply Chains survey. Of the respondents reporting actual business interruption, 7% relate to financial failure of suppliers, said the report, which combined 100 responses, found. The importance of supply chain risk management has increased significantly to 42% in 2009, up by 15% over 2008, according to the report. “Organizations are embedding processes to address supply chain risks and taking a more hands-on and proactive approach,” the survey noted, adding this includes communicating expectations to suppliers and using regular follow-up.“Less reliance on passive strategies such as risk assessment and insurance is reported.” Pressure is travelling up the supply chain: respondents reported a 49% or more increase in scrutiny by customers. Additionally, pandemics were cited as a growing concern by 19% of respondents. The risk of physical damage at a supplier’s facility decreased by 10% from 2008 to 43%, according to the survey, while data security risk decreased by 14% to 29%. “The perception of increased risk, particularly financial exposure, is not necessarily borne out by experience with 7% facing losses related to the financial failure of suppliers,” according to Aon. “Although this is significant, the most commonly reported disruptions are due to physical incidents at own sites (14%) and incidents at suppliers (12%).”