In its report Building Resilience in Supply Chains, the WEF cited figures from Accenture that showed companies that are hit by significant disruptions, such as Hurricane Sandy in October 2012, suffered an average loss of 7 per cent of their share prices, demonstrating the importance of risk management. The report argued that to face up to the challenge, a body should be created to develop a strategy against the potential disruptions.
It recommended: “Institutionalise a multi-stakeholder supply chain risk assessment process rooted in a broad-based and neutral international body.”
The report identified four factors that are central to mitigate the risk of supply chain disruption. These are: policy, to create the new organisation that involves stakeholders across the globe; IT, to use and expand data sharing platforms; strategy, to develop adaptable approaches to resilience; and partnership, to harmonise global resilience standards.
Nick Wildgoose, supply chain product leader at Zurich Insurance, said: “Risk management has to be embedded within an organisation from top to bottom and has to include a consistent set of key performance indicators.”
The report also called for international standards bodies to be mobilised and encourage greater adoption of supply chain resilience standards across the world.
In the report, David Heyman, assistant secretary for policy at the US Department of Homeland Security, said: “Our economic security depends on global supply chain systems and a common global understanding of risk.”