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Seeing Beneath The Surface - Understand Supply Chain Disruption


Anticipating Hidden Risk in the Supply Chain Using Advanced Analytics and Reducing Losses with Supplier Insurance Coverage

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Seeing Beneath The Surface - Understand Supply Chain Disruption

  1. 1. Anticipating Hidden Risk in the Supply Chain Using Advanced Analytics and Reducing Losses with Supplier Insurance Coverage SEEING BENEATH THE SURFACE
  2. 2. Today’s Presenters JON BALL Senior Global Director, Analytic Consulting Dun & Bradstreet NICKWILDGOOSE Global Supply Chain Product Leader Zurich Insurance
  3. 3. AGENDA Causes and Frequency of Supply Chain Disruption Development of Risk Transfer Solutions Prioritizing Actions Around “Tier N“ Analysis
  4. 4. Causes and Frequency of Supply Chain Disruptions
  5. 5. 5 Business Continuity Institute Supply Chain Resilience 2016 Report – Supply Chain Disruption Related Economic Losses 70% of organizations impacted 2% experienced disruptions of 50m+ BCI Supply Chain Resilience 2016
  6. 6. 6 Top 10 Causes of Supply Chain Disruptions 26% 27% 27% 30% 46% 54% 59% 69% 71% 130% 0% 20% 40% 60% 80% 100% 120% 140% Insolvency in the supply chain Act of terrorism New laws or regulations Currency exchange rate volume Adverse Weather Outsourcer failure Transport network disruption Cyber attack and data breach Loss of talent / skills Unplanned IT or telecommunications BCI Supply Chain Resilience 2016
  7. 7. 7 Supply Chain Disruptions by Supplier Tier BCI Supply Chain Resilience 2016
  8. 8. 8 Importance of Supply Chain Sub-Tiers HIDDEN RISK 51% of supply chain disruptions originate with Tier 2 & Tier 3 suppliers - Allianz Risk Barometer on Business Risk (2014 Report) POORVISIBILITY 54% of executives admit that their firms do not have visibility beyondTier 1 - KPMG TOP PRIORITY 80% of the companies worldwide see better protection of the supply chain as a top priority - Accenture Tier 3 Company Tier 1 Tier 2 VISIBILITY BARRIER
  9. 9. 9 Reputation Partnerships/ Strategic Suppliers Single Sourcing Non-Damage Disruptions Increasing Market Shortages Increased Complexity New Business Models: Globalization, Outsourcing, and Specialization
  10. 10. Development of Risk Transfer Solutions
  11. 11. 11 RiskTransfer – Insurance History Tier 3 Company Tier 1 Tier 2 1. Initial focus of risk transfer on property and business interruption of insured 2. Physical damage atTier 1 suppliers
  12. 12. 12 Reduced fluctuations in results Balance sheet protection Protect brand & reputation Informed decision making Maintain customer relationships Tailored to your needs Benefits of Taking All-Risk, Multi-Tier Approach to Supply Chain Risk and Transfer
  13. 13. 13 Risks from Critical Suppliers: Multi-Tier and Non-Physical Natural Catastrophes IT Failure Labor Disputes Transportation Power Failure Delays in Supplier’s Supplier Supplier Insolvency Political Risk Failure at Critical Suppliers Piracy
  14. 14. 14  Based on anticipated loss of profit and/or increased cost of working  Indemnity period and coverage tailored to risk where possible  Premium/limits calculated per supply/supplier based on the agreed limit  Exclusions include quality and growing risk Tailoring Risk Protection to Exposures  Agreed claims methodology before inception or post loss whichever is most appropriate  Anticipated monetary deductible equivalent to approximately 10% of limit.
  15. 15. 15 Value Chain Risk Assessment Required for Transfer Where is the value? What are the risks? How robust are the control measures? How bad could it be?
  16. 16. 16 Suppliers risk management Suppliers relationships Suppliers skills and experience Skills and IP management Internal risk management Business continuity management Vulnerability to accidents / errors Vulnerability to malicious intervention Regulatory issues Skills and IP management Commercial contract management Product management / new product development Supplier selection management Supplier management (financial strength) Supply chain performance Economic Geographic Political Structural Risk Assessment – Actionable Risk Insights
  17. 17. Prioritizing Actions Around “Tier N“ Analysis
  18. 18. 18 Digitized Approach to Mapping Tier-N Suppliers And Risk Assessment of Supply Chains 1. Map Supply Chains (from Tier 1 to Tier N suppliers)  Discover buyer-seller networks, leveraging proprietary sources & D&B’s DUNS# 2. Profile Risk of Each Tier N Supplier  Profile firmographic & risk attributes  Leverage D&B proprietary assets 4. Sub-Tier Risk Assessment & Exposures  Identify tier 1s with high risk supply chains 3. Calculate Risk of Each Supply Chain  Risk of the tier 1s supplier network  Tier factor & Criticality factor
  19. 19. 19 Management by Exception Maximize mitigating supply chain disruptions while increasing efficiencies – focus on the ‘smallest pool of Tier 1 suppliers with highest odds of performance issues down the road’
  20. 20. 20 Summary View (Tier 1;Tier 2;Tier 3 & Other Levels) Capacity – client input
  21. 21. 21 Ajaxey Stamping – Distribution of Sub-Tiers by Country Risk (Individual supplier view)
  22. 22. 22 Takeaways  Your company’s performance is being impacted by supply chain disruption costs.  Need to be proactive and prioritized in your approach to critical suppliers on a multi-tier basis.  Technology and risk transfer innovations are starting to be adopted by your competitors.
  23. 23. Presenter Contact Information JON BALL Senior Global Director,Analytic Consulting Dun & Bradstreet ballj@dnb.com +1-516-462-2417 NICKWILDGOOSE Global Supply Chain Product Leader Zurich Insurance nick.wildgoose@uk.zurich.com +44-787-588-6068
  24. 24. ThankYou!

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