February 5th, 2019

Environmental Disasters Leading to Increased Disruption to Supply-Chains

Posted at 1:00 AM ET

extreme-weather-2As environmental risks crystallize with increasing frequency and severity, the impact on global value chains is likely to intensify, weakening overall resilience, according to Global Risks Report 2019, which was produced by the World Economic Forum with the support of Guy Carpenter’s parent company, Marsh & McLennan Companies.

Disruptions to the production and delivery of goods and services due to environmental disasters are up by 29 percent since 2012.(1) North America was the region worst affected by environment-related supply-chain disruptions in 2017; these disruptions were due notably to hurricanes and wildfires.(2) For example, in the US automotive industry, only factory fires and company mergers caused more supply-chain disruptions than hurricanes.(3) When the disruptions are measured by the number of suppliers affected rather than the number of individual events, the four most significant triggers in 2017 were hurricanes, extreme weather, earthquakes and floods.(4)

In the Global Risks Report 2019, environment-related risks dominated the latest Global Risks Perception Survey (GRPS) for the third year in a row, accounting for three of the top five risks by likelihood and four by impact.

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Notes

(1) Slubowski, C. 2017. “Weather-Related Supply Chain Risks Shouldn’t Be Ignored.” Zurich American Insurance Company. 3 October 2017. https://www.zurichna.com/en/knowledge/articles/2017/10/weather-related-supply-chain-risks-shouldnt-be-ignored

(2) Resilinc. 2018. EventWatch® 2017 Annual Report. https://info.resilinc.com/eventwatch-2017-annual-report-0

(3) JLT. 2018. JLT Specialty: Automotive Supply Chain Disruption Report 2018. London: JLT Specialty Limited. https://www.jlt.com/-/media/files/sites/specialty/insights-automotive/jlt_automotive_supply_
chain.ashx

(4) JLT. 2018. JLT Specialty: Automotive Supply Chain Disruption Report 2018. London: JLT Specialty Limited. https://www.jlt.com/-/media/files/sites/specialty/insights-automotive/jlt_automotive_supply_
chain.ashx

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