Marsh has conducted a study and their findings show that while firms are improving efficiency in their supply chains to cut costs during this economic crisis, their efforts are increasing their risk exposures.
This risk exposure arises because firms are likely to monitor their largest suppliers closely and try to increase efficiency within those transactions, thus ignoring their smaller suppliers that are more vulnerable during tough economic times. If a small company that is crucial part of a company’s supply chain experiences trouble this could stop the process of production and order fulfillment.
Marsh states that companies should evaluate their supply chains in order to find ways to lower the risk. The options Marsh suggests include:
· reviewing their business interruption strategies, supplier network and financial exposures
· taking advantage of new insurance solutions that address risks that have not previously been regarded as insurable.
http://www.insurancejournal.com/news/international/2008/10/17/94734.htm
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