UPFRONT
NEWS ANALYSIS
Stress-testing supply chains COVID-19 and the Ever Given crisis have revealed the deep-rooted fragility of the manufacturing ecosystem. Where do supply chains stand now, and how can insurance companies support their manufacturing clients?
THE MANUFACTURING sector has been shaken by the COVID-19 crisis, which has buffeted the global supply chain and forced businesses of every size to rethink their operating models. While various manufacturing businesses have been impacted in different ways and thus require varying solutions, there are several cross-sector challenges that COVID-19 has exacerbated. Chief among them is global and domestic supply chain disruption, which is interrupting both upstream and downstream processes. This disruption has been building for some time, says Michael Burg, managing director of Gallagher’s manufacturing prac-
evaluate those risks and exploring the insurance solutions that are available to address those risks rather than just retaining them on the balance sheet.” The manufacturing space evolves in waves, says Riskonnect CEO Jim Wetekamp, who first noticed the new wave that came with COVID-19 when supply chains in China first started being impacted. Organisations began looking for better ways to assess their risk, understand the challenges they faced and build agility as COVID-19’s impact started to pivot from transportation to hospitality, healthcare and financial services. “What [manufacturing businesses]
“We see both supply- and demand-side challenges to the supply chain, so we’re helping our clients evaluate those risks” Michael Burg, Gallagher tice in the US, as supply chains have been getting tighter and more focused on just-intime delivery. “COVID has certainly accelerated some of the supply chain challenges and risks that we advise our clients on,” he says. “We see both supply- and demand-side challenges to the supply chain, so we’re helping our clients
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have had to do is work through the crisis to establish what continuity looks like moving forward, to think through better workforce planning, alternative inventory policies and planning parameters such as how they think about their supply chains,” Wetekamp says. “They’ve had to give greater visibility to inbound materials, and while they always had
that for critical goods, they may not have the same level of traceability for some of the more indirect goods or smaller components.” Awareness of the exposure that exists around single-source suppliers has been growing for some time now, Burg says, so it has long been a part of enterprise risk management evaluations for manufacturers. Wetekamp says that during COVID-19, manufacturers have had to understand not only their tier-one supplier risk, but also the second- and third-tier risk because of the extent to which the pandemic has challenged freedom of supply. COVID-19 was something of a black swan event for the insurance sector, but this didn’t stop insurance businesses from working to actively protect their clients throughout the crisis. According to Brian Gerritsen, manufacturing practice lead at Travelers, as soon as the pandemic emerged, Travelers’ risk control team proactively connected with agent and broker partners and customers to provide employee safety recommendations and help
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14/05/2021 8:16:16 am
