Impact of supply chain attacks hits highest rate ever

August 24, 2017

Attacks on global supply chains by terrorist groups have hit the highest rate ever as have associated costs, according to a report released today by BSI. The type of attack can vary from targeting the oil infrastructure, hijacking and cargo theft through to contraband smuggling, extortion and kidnapping schemes. This causes considerable direct and indirect economic costs, disrupts the international movement of freight and creates reputational risks to organizations.

Analysis conducted by BSI's SCREEN Intelligence program found that, over the past 10 years, an average of 3.1 attacks have occurred each week. In 2016 a total of 346 attacks took place. With terrorist attacks on the rise, and the causes of disruption also rising, BSI warns that the costs to international trade and commerce will continue to increase.

In the last decade terrorists have attacked the supply chain in 58 countries, indicating the global nature of the problem. However, there are particular routes and countries that have been hit worse by these kinds of attacks. Supply chain terror attacks occur at alarming rates in many countries, including Colombia, India, and Turkey.

Costs to the supply chain as a result of attacks are both direct and indirect. Physical attacks against the supply chain, such as arsons, bombings, or armed assaults create direct disruption and often result in the destruction or loss of transported cargo.

In the UK, the Modern Slavery Act 2015 (MSA)* is highlighting the issue of modern slavery and human trafficking, and the risk to business of finding examples of it in global supply chains. Several high-profile court cases^ have highlighted - the irresponsible practices that are occurring in full view across Britain.

Additionally, attempts to tamper with international cargo shipments can compromise the integrity of the load or result in the seizure or destruction of goods by customs authorities. When companies have to unexpectedly divert or reroute shipments the costs can reach massive figures. For example, the terrorism related to the Syrian conflict forced Lebanese officials to reroute $1 billion worth of exports and resulted in the loss of $754 million in revenue for the Jordanian trucking industry.

BSI's analysis indicates that terrorism also imposes significant indirect costs on international trade and supply chains. Increased security measures, while intended to mitigate the risk of additional attacks, have disrupted the typical flow of cargo, especially for cross-border shipments. These additional procedures have often slowed the movement of freight and increased shipping costs, and companies have frequently responded by rerouting cargo or modifying shipping arrangements, further driving up costs. For example, following the Paris attack in November 2015 France imposed stricter controls along the borders with Belgium and Luxembourg, costing companies an additional $59 per delayed vehicle. The total cost to shippers in Belgium was estimated at $3.5 million within the first month following the attack.

BSI’s unique Trafficking & Supply Chain Slavery Patterns Index shines a critical light for business, government, and civil society to understand the risk associated with the movement and exploitation of people between 191 source countries and 193 destination countries. Each combination of countries has been ranked from low to severe based on the risk score.

The Index’s inputs include BSI’s proprietary SCREEN Forced Labor Intelligence along with independent trafficking and exploitation data, economic disparity, and countries’ geographical proximity information. The data has been verified against the citations made by credible sources# to provide a holistic understanding of the probability of these types of abuses, threats and risks as well as real-world documented cases.

David Fairnie, Principal Consultant, Supply Chain Security at BSI said: "The direct impact from acts of terrorism and the indirect effects from terrorist organizations exploitation of the supply chain have been, and will continue to be, critically felt across Europe. Terrorist attacks in major cities and against key transportation nodes in the UK, Belgium, France, Germany and the Netherlands have triggered heightened security levels and emergency border controls across the continent, leading to significant commercial impact on our client's businesses. BSI witnessed significant spikes in customer support requests, for our supply chain security advisory, resilience and business continuity services, after major terrorist events. I believe Supply Chain Terrorism will continue to significantly impact Europe for decades to come."

The report also found that in 2016 terrorists targeted a wider range of industries and modes of transport than in any other year. In particular, terrorists increasingly targeted industries generally associated with private or corporate supply chains rather than state-owned supply chain infrastructure. Over three years of data, terrorist attacks against the agriculture and food and beverage sectors more than tripled, attacks on the industrial and manufacturing materials and pharmaceuticals sectors more than doubled, and attacks against the metals industry nearly doubled. 

Worryingly, despite the upward trend of attacks, BSI's report found that there is still inadequate spending on supply chain security. For example, in India, cargo throughput has increased sharply over the past decade, with air freight volume alone increasing by nearly 120 percent. However, this growth in shipping volume has not been met with a matching investment in supply chain security. Similar concerns in Bangladesh have led the European Union to recently prohibit the direct importation of air freight from Bangladeshi airports.

Jim Yarbrough – Global Intelligence Program Manager at BSI concluded: "It is a common misconception that terrorism is strictly a national security issue and that counterterrorism is solely the responsibility of governments. However, our analysis clearly shows that commercial interests and private organizations are increasingly threatened, extorted, and directly targeted by terrorist organizations all over the world. Corporations must take notice and prepare their organizations accordingly. We know that industry leaders are implementing stronger supply chain security measures and ensuring that their business partners and international suppliers are fully vetted and armed with the information and knowledge that will protect their business. They understand that these measures can go a long way in maintaining their global operations and business continuity."


To purchase a copy of BSI's Terrorist Threats to International Trade and the Supply Chain report, visit bsi-intelligencecenter.com

Notes to Editors:

BSI's web-based intelligence solution, Supply Chain Risk Exposure Evaluation Network (SCREEN) provides continuous evaluation and threat ratings for 200+ countries along with interactive risk maps and qualitative reports.

BSI's Intelligence Center allows professionals to purchase SCREEN's country risk reports on a one-off basis. To learn more about our available reports and how to purchase one, please visit our website https://www.bsi-intelligencecenter.com/

About BSI
BSI (British Standards Institution) is the business standards company that equips businesses with the necessary solutions to turn standards of best practice into habits of excellence. Formed in 1901, BSI was the world's first National Standards Body and a founding member of the International Organization for Standardization (ISO). Over a century later it continues to facilitate business improvement across the globe by helping its clients drive performance, manage risk and grow sustainably through the adoption of international management systems standards, many of which BSI originated. Renowned for its marks of excellence including the consumer recognized BSI Kitemark, BSI's influence spans multiple sectors including Aerospace, Automotive, Built Environment, Food, Healthcare and ICT. With 81,000 clients in 181 countries, BSI is an organization whose standards inspire excellence across the globe.  

About BSI Supply Chain Services and Solutions
BSI Supply Chain Services and Solutions is the leading global provider of supply chain intelligence, auditing services, audit compliance and risk management software solutions, and advisory services. Our mission is to help corporations, governments and associations identify, manage and mitigate global supply chain risks and maintain world class governance risk and compliance programs.  Our holistic supply chain risk management suite is designed to predict and visualize risk, and develop robust risk mitigation and compliance management programs to protect your supply chain, brand and reputation. Our intelligence-infused supply chain solutions and global network empower our clients to understand global supply chain risk with unequaled precision.

To learn more, please contact us at supplychain@bsigroup.com or visit our website at www.bsi-supplychain.com.    

 

 

 

Thom Walton/David Lindley-Pilley

Kara Martin

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BSI Supply Chain Services and Solutions

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Email: supplychain@bsigroup.com