Supply Chain Risk Insight Report

The COVID-19 crisis has emphasized the necessity of business continuity planning that considers all types of potential natural disasters, including disease outbreaks. The COVID-19 outbreak has highlighted the importance of continual communication with suppliers abroad and knowing their vulnerabilities to disease outbreaks. It is important for companies to either develop or revise reactionary plans for critical components of their supply chain that may be affected by an outbreak.

Global companies are reassessing their supply chains within and through China, looking for other nearby regional opportunities, and countries such as India, Bangladesh, Cambodia, Vietnam, and Myanmar are making moves to attract competitive business. As companies restructure their supply chains in Asia and pursue these opportunities, they must consider the corporate social responsibility risks still rife throughout the region. Furthermore, natural disasters, invasive species, and diseases ravaged the continent in 2019, causing widespread destruction of infrastructure and agriculture and impacted supply chains, underscoring the need for understanding the varying risks associated with entering a new country in Asia.

Over the past year, BSI noted security risks, in the form of stowaways contaminating shipments, as well as corporate social responsibility issues, particularly the abuse of migrant labor, in several key locations around the world. BSI recorded instances in which the business continuity of supply chains suffered as a result of migration in 2019, underscoring how migration can directly or indirectly threaten business operations. Although BSI noted active measures by countries attempting to stem mass migration combined with other geopolitical developments that have in some regions similarly impacted the flow of migration over the past year, it is again very likely that many of these issues will continue to shape supply chain policies in 2020.

Entering 2020, many protest movements are still ongoing and governments, such as in Guatemala, Costa Rica, Uruguay, and Chile, have begun to pass legislation limiting the activities of protesters to ostensibly prevent such movements from spreading. Throughout Central and South America and the Middle East, such demonstrations raise the fear that the rest of 2020 will possibly see even more countries undergo protests, revealing political instability in places previously thought to be calm and stable.

Throughout 2019, successive natural disasters taxed many countries’ resources by causing lasting damage to infrastructure. These severe weather events have led to experts considering the medium- and long- term impacts of climate change on regional infrastructure, generating a need to re-examine supply chains vulnerabilities as climate change degrades existing infrastructure and necessitates new infrastructure.

Underscoring security concerns globally, tensions in the Middle East continued to bubble and impact supply chains in 2019. BSI noted terrorist attacks occurring across a wider range of countries over the year prior, which saw the bulk of attacks take place in several hotspot countries. The global risk of terrorism still looms throughout the Middle East despite the rollback of ISIS that culminated in the death of its declared leader. While global terrorist networks such as ISIS, Al Qaeda, and Boko Haram still impact supply chains in the Middle East and parts of Africa, BSI also recorded more instances of lone-wolf terrorism in 2019, with the isolated, unpredictable episodes of violence likely to be more common in 2020.