According to the British Standards Institution, 87 percent of businesses believe that risk management protects revenue and enhances value for money;  93 percent agreed that it improves accountability, decision making, transparency and visibility.

Crisis management
is key for survival
18 June 2008

Many enterprises think they are better prepared for a crisis than they really are, the Association of Insurance and Risk Managers annual conference heard today.

As a result, they run a risk of disappearing altogether in the event of a really big incident, according to Dennis Murphy, head of risk consultants at Allianz Global Corporate and Specialty, who added 80% of firms hit by a major disaster go out of business.

Many of those that do continue never recover their previous stature. Yet, with the correct planning, the most serious problems can be anticipated and overcome, greatly increasing corporate resilience, he told delegates.

“Many people don’t understand what a business continuity plan is,” he said. “They may have emergency plans in place, and think that’s enough, but you need to go much deeper than that. You need to look beyond the first 48 hours,”

Mr Murphy said. “People think they’re covered for business continuity when they’re only covered for business interruption.”

Customer retention is a key element of business continuity planning that is often overlooked, he continued, with people going elsewhere and never returning in the event of supply disruption.

“If you lose a customer through business interruption, there’s no guarantee you’ll get them back. We can replace your buildings and your hardware, but its less easy to rebuild your reputation,” Mr Murphy concluded.

“It’s in our interest to support you with your continuity plans. It can help to keep our customers in business and reduce our exposure to losses.”

Source: Breaking News from Post Magazine
 

Global supply chains
becoming more compex
18 June 2008

The global supply chain is more complex and efficient than ever before, but it is still vulnerable to certain key risks that need to be managed effectively, delegates at the Association of Insurance and Risk Managers conference heard today.

AIG Global Loss Prevention Practices’ senior vice president, Steve McKay and corporate manager, Nick Tilley said historically, supply chain considerations were fairly simple and often focused on issues such as how to move goods from A to B or how to optimise inventory levels. However, as supply chains have evolved to be more intricate and effective, so have the risks they engender.

“A shift to global sourcing, plus the introduction of ‘just-in-time’ production processes, has resulted in rapid manufacturing, low inventories and a reliance on modern transportation and logistics,” said Mr McKay.

“Coupled with world demand for commodities and finished goods, this has resulted in a taut supply chain that is extremely sensitive to three major issues: capacity constraints at major transport hubs and a projected shortage of container ships; strategic supplier failure; and business interruption of a key supplier.”

Regarding strategic supplier failure, McKay added: “As we continue to seek low cost raw materials and goods, our dependency on new suppliers with unproven systems increases. Product quality or delivery issues may cause significant impact to revenues and to a company’s brand image in the market place.”

He added that other issues such as a supplier’s environmental or health and safety policies could also present problems.

Nick Tilley continued: “Business interruption at a key supplier may have significant consequences for a company’s own production capacity. As a result, how key suppliers address business interruption issues and contingency plans also needs to be managed to optimise supply chain resilience.”

Posing the question how can companies address these supply chain risks? Mr Tilley concluded: “The identification of supply bottlenecks and critical dependencies in the supply chain can enable prioritisation of key supplier relationships.

“Appropriate communication tools can then be used to extend effective controls to those suppliers and allow you to monitor, assist or intervene where deficiencies are identified.”

Source: Breaking News from Post Magazine

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