Unsurprisingly, the Business Continuity Institute’s latest annual supply chain resilience report is dominated by issues arising from Covid-19. After years where supply chain disruption was dominated by IT and information security incidents; neither of these even feature in the top 5 causes of disruption in 2020, which were:
- Human illness
- Loss of talent/skills (#4 in 2019)
- Transport network disruption (#5 in 2019)
- Adverse weather (#2 in 2019)
- Health and safety incidents
Presumably though this is largely a temporary change rather than a permanent shift in the risk landscape. Equally, it is not surprising to see increases in the incidence of reported supply chain disruptions:
- 88% of organisations reported experiencing at least 1 disruption (up from 67% in 2019); and
- 28% reported experiencing more than 10 disruptions (up from 6% in 2019).
The breakdown of where in the supply chain disruption originated is similar to previous years, with 56% overall originating with tier-1 suppliers. However, in the specific case of Covid-19 disruptions the figure is only 46%; ie more than half of Covid-19 disruptions originated at tier-2 or below.
Aside from Covid-19 issues, there is cause for optimism in the finding that only 24% of respondents had not been able to recover any of the financial impact of their most significant supply chain disruption from insurance. This is a big fall from last year’s figure of 43%, which itself came on the back of a sustained downward trend (down from 57% in 2016). However, 2/3 of the organisations that were able to make insurance claims recovered less than half their losses; although some of this is related to specific Covid-19 exclusions.
