Natural disasters and other severe weather events remain a ceaselessly difficult-to-predict risk to business continuity in any supply chain. BSI noted again how several major weather events in recent months disrupted supply chains throughout Southeast Asia, creating an assortment of challenges for companies and shippers in the area.
Supply chains in India have arguably been exposed to the most impacts from natural disasters over the course of the last several months. For example, BSI noted how Cyclone Vayu caused widespread closures and evacuations of businesses, transportation stations, and ports days in advance of the storm’s expected landfall in western India. Thankfully, the cyclone veered toward the Gulf of Oman, sparing the region of greater potential damage. Prior to Vayu, in April-May, India bore the brunt of Cyclone Fani on its east coast, but the country mitigated potential damage through a series of early evacuations and naval outreach to fishing fleets. Cyclone Fani was reportedly one of the largest cyclones in five years to make landfall, and Vayu, should it have made landfall, was projected to be the most powerful cyclone to hit the region since 1998. Also in India, a recent heat wave brought about by a delayed monsoon season has resulted in water shortages, impacting business operations. With a climbing death toll, authorities in various districts posted restrictions on construction and advised people to stay inside through most of the midday. Exacerbating that disruption is concern that the repeated heat waves may damage roadways and railways through the region as well as reducing crop yields.
Elsewhere, supply chains in China and Pakistan also had to contend with unprecedented torrential rainfalls. Millions of people have evacuated from parts of southern China as the rains destroyed roads, bridges, and arable land throughout the region. Some experts report that severe weather events in Asia attributed to rising global temperatures could cost the region eleven percent in GDP growth by the end of the century. Such disruptions typically impact the agricultural industry, creating the most destruction for fisheries and farms. However, the impact on infrastructure in developing areas can create current and future disruptions to transportation and shipping.
In conducting risk assessments of business partners, companies should account for not only the vulnerability and exposure of those partners to natural disasters, but also the ability to recover quickly from severe weather. Resiliency to natural disasters, primarily the ability for countries to repair and replace infrastructure as well as the availability of alternative shipping lanes and facilities, are critical in any evaluation of a prospective supply chain.
The need for effective business continuity planning may also be accomplished by mirroring the requirements of a new category of the revised CTPAT MSC. The revised Customs and Trade Partnership Against Terrorism (CTPAT) Minimum Security Criteria creates a new category of requirements called “Security Vision and Responsibility.” A component of the Security Vision and Responsibility calls on CTPAT members and prospective members to incorporate a cross-functional team, including representatives of all relevant departments, that manages the maintenance of CTPAT certification and all the requirements therein. Similarly, companies can incorporate cross-functional teams that manage natural disaster exposure and resiliency within the supply chain. By instilling common procedures and protocols throughout the supply chain for reacting to natural disasters and other severe weather phenomena, companies can be better prepared to mitigate the disruption and damage to the supply chain.