Top 10 supply chain risks to watch in 2020
Supply chains are under constant risk of disruption. From cyber-attacks to ongoing COVID-19 pandemic, Reslience360 has revealed its top 10 risks to watch in 2020.
10 | Threat of cyber-attacks
With data breaches in the first half of 2019 exposing 4.1bn records,68% of businesses are seeing an increase in cybersecurity risks as the world becomes increasingly connected by technology.
Within supply chains cyber attacks have typically been time consuming and costly for companies, with cyber attacks expected to cause US$6trn worth of damage by 2021.
9 | Changes in trade policy
Since 2018, a trade war between the US and China has been harming the economy,making business between the two countries difficult. Uncertainty surrounding this, and other ongoing trade negotiations such as Brexit, will continue to cause supply chain delays.
8 | Increased economic sanctions
Ongoing global tensions, such as the conflicts between the US and Mexico or Iran, threaten to cause technology companies headaches in the search for alternate suppliers. Many companies have turned to illegally shipping products through third-party companies to evade newly-imposed tariffs from the ongoing conflicts.
7 | Protests and strikes
In 2019, 50,000 General Motors (GM) factory workers walked out, the biggest factory strike in the US since 2007 costing the company over US$1bn. Protests, strikes and walkouts have been targeting supply chains and their infrastructure, in order to maximise their impact.
6 | Border delays
Migration concerns are leading to a number of nations implementing stricter border controls, just last year Nigeria closed all of its land borders to boost its local economy. With the rising political tensions, the import of goods and supply chains could experience significant delays.
5 | Climate activism
Last year saw the largest climate strike in history, with events occurring in 163 countries around the world. The growing concern for the environment and climate change suggests that the activism won’t be stopping anytime soon. Crude oil shipping routes, heavy industry manufacturing sites and transport hubs are expected to be the target of activism this year.
4 | New Environmental Regulations
Global efforts to address and reduce air pollution are intensifying, just this February 600 Thai factories temporarily closed to address the city’s smog issue. The challenge for companies trying to address the issue, is finding the balance between limiting industrial pollution, without impacting economic growth.
3 | Territorial disputes due to new trade routes
Use of the Northern Arctic route between Asia and Europe grew by 60% in 2019. The risk of territorial disputes and environmental degradations increases daily as the use of this key route continues to increase.
2 | Narcotic Smuggling in container ships
In 2019, the US seized 20 tons of cocaine on a shipment, the largest seizure in history. This follows the increasing trend of narcotics being smuggled via container ships - something that can lead to fines of up to $50mn. As a result the industry is seeing an increase in port security causing longer import delays.
1 | Black swan events
It’s impossible to predict some supply chain disruptions, no matter how well prepared your risk mitigation strategy is. The ongoing COVID-19 pandemic is evidence of this. Quarantines, lockdowns of entire countries and other major security measures have seen air, ocean and ground transport routes be significantly disrupted by the coronavirus.
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