This week our guest blogger is from Expeditors Cargo Insurance Brokers (ECIB). ECIB provides supply chain risk management solutions tailored to the specific needs of its clients, leveraging its background in logistics and hands-on approach to claim subrogation to provide access to lower rates and broader insurance coverage. ECIB is a wholly owned subsidiary of Expeditors International of Washington, Inc. It is headquartered in Seattle, Washington, with employees located throughout the U.S., Mexico, Europe, Australia, and the Middle East.
Supply chains can be a complex system of moving parts, organizations, and variables. Inevitably, a supply chain will encounter a variety of risks throughout their networks. These risks evolve as companies adapt to the conditions that cause them. Below are three current risks that companies are experiencing in today’s supply chain:
- Cargo Theft
Theft is always a risk when shipping goods internationally or domestically. According to Phil Coolberth of Cargo Signal, the FBI has reported that pilferage in the supply chain is estimated to be somewhere between $15 Billion and $30 Billion every year in the United States alone. Nearly all theft occurs while cargo is at rest, whether stopped roadside, in a warehouse, or at another cargo handling facility. While theft continues to be present on a global scale, recent trends show an increase in such events within European airports, specifically at ground handling areas. The most effective way to secure freight is to keep it moving, monitor it, and have a close relationship with local law enforcement or a security team that is capable of responding and recovering the freight if possible.
- Cyber Risk
While digitization aims to increase the overall safety and efficiency of logistics operations, there is still room for cybercriminals to attempt a breach. The most common types of cybercrime in the supply chain are bank fraud and ransomware, where hackers attempt to gain access to bank routing information and other financial data. Companies who do not invest in strong cybersecurity practices pose the highest risk for these types of attacks, as their firewalls and password requirements may not be as strict as companies who have dedicated cybersecurity staff and programs in place. A great way to avoid being the victim of cybercrime is to educate and train all employees on how to recognize phishing, social engineering, and fraudulent emails or calls. This, paired with a basic system-level cybersecurity program, will act as a good baseline defense against hackers and fraudsters.
- Catastrophes
Though catastrophic events are uncommon in most areas of the world, they can still strike at any moment. When such an event does occur, damages and losses can be, well, catastrophic. Examples of these types of events are hurricanes, wildfires, tornadoes, and explosions. Alex Williams of Expeditors’ corporate insurance group, explains that these types of large-scale commercial losses have made it challenging to insure goods that are exposed to certain risks, such as catastrophe coverage for warehousing goods in coastal areas. There are, however, ways to mitigate the impact of certain catastrophes, such as preparing for hurricanes before the season starts.
Regardless of a company’s size or breadth, no company is immune from supply chain risk. However, there are ways to mitigate or prepare for certain perils that will lessen the chances of them affecting the organization as a whole. For more information about supply chain risk, or to request a risk analysis, contact ECIB today.