Governments and business must collaborate to reduce supply chain ...

A new report presented at last week?s economic forum at Davos, calls on governments to come together to tackle risks, whether they be climate change or piracy off the Gulf of Aden, writes John Manners-Bell

At the World Economic Forum (WEF) annual meeting in Davos, Switzerland, the issue of supply chain risk took a high profile, with senior government figures and industry leaders seeking to develop ways in which economic damage caused by disrupted supply chains could be mitigated.

As part of the initiative, a new report was launched at the event ??New Models for Addressing Supply Chain and Transport Risks(http://www.weforum.org/SupplyChainReport) ? that highlighted the urgent need to review risk management practices. According to the WEF, governments and companies need to become more resilient in the face of emerging and complex risks.? The largest risk is from the unknown. Major disruptions in the past five years ? including the global financial crisis, Yemen parcel bomb scare, flooding in Thailand and the Japanese earthquake and tsunami ? have highlighted how risks outside the control of individual organisations can have unintended consequences that cannot be mitigated by one organisation alone.? Encouragingly, more than 90% of those surveyed by a WEF and co-report author Accenture initiative indicated that supply chain and transport risk management has become a greater priority in their organisation over the past five years. While global supply chains are increasingly complex and spread out, some critical components are only available in one location.? For the world?s largest shipping companies, Somali piracy is the most serious threat. It costs US$12-17bn every year in insurance, security and other costs, says Dan Sten Olsson, CEO of Stena. Internationally, the report calls for governments to come together to tackle risks, whether they be climate change or piracy off the Gulf of Aden. In the latter case, international law needs to be updated to decide jurisdictions and military responsibility, among other issues. One disincentive to improving risk management is that financial markets have been rewarding companies for being very lean. But this additional cost is necessary for businesses to be able to absorb shocks and to rebound afterwards. Yet, risks remain, because today?s supply chains, especially in emerging markets, can be long and not entirely traceable.? Overall, the report concludes that there is a need to introduce greater flexibility in operations and enhance collaboration between businesses and governments ? nationally and internationally ? to better manage the risks to global supply chains.? John Manners-Bell is Practice Leader at Transport Intelligence

This article was posted by Neptune Maritime Security via ifw-net.com. MaritimeSecurity.Asia in cooperation with www.neptunemaritimesecurity.com

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