Takeaways from BSI Connect SCREEN’s Quarterly Risk Intelligence Outlook: Part 1
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August 28, 2023 - Throughout the first half of 2023, BSI Connect SCREEN’s analysts tracked global supply chain risks such as inflationary pressures, extreme heat weather events, and labor strikes. Many risks are expected to continue throughout the remainder of 2023 and beyond, and it is essential that business strategies prioritize resiliency planning to help mitigate further disruptions.
BSI Connect SCREEN’s analysts summarized these risks in the SCREEN Q2 insights webinar, the full details of which can be found in the Quarterly Risk Intelligence Outlook. Below are the four key takeaways from the webinar:
Inflationary pressures and cargo theft
Many countries are experiencing higher than usual food prices, with an average food shop in the US now 4.7 percent higher than in June 2022, as natural disasters and geopolitical events disrupt food supplies.
The Quarterly Risk Intelligence Outlook shows that inflation is contributing to the significant volume of food and beverage, agricultural, and alcohol products that thieves target. Global unrest makes food an attractive target for criminals, who are now using more sophisticated theft methods, such as fictitious pickups (Read more in Bridging the gap between food fraud and food security by Neil Coole, Director of Food and Retail).
As seen in Q2 and early Q3, electronics, particularly high-value ones like smartphones and laptops, will continue to be highly sought out throughout this year as additional countries introduce import and export controls on the high-end semiconductors required to manufacture these goods. Though there are signs of inflation easing globally, its pressures will likely continue to underpin theft trends through H2 2023 and into 2024 (Read more on the status of semiconductors in Transforming the digital landscape: Unveiling the power of sustainability in ICT by Ryan Lynch, Practice Director of Sustainability).
Heatwaves leading to business disruptions
Heatwaves are increasing in frequency and intensity, and an estimated 61,000 people in Europe died last year due to rising temperatures. This suggests that decades of efforts to adapt infrastructure to higher climates are failing to keep pace with the intensity of global warming.
Heatwaves pose a threat to worker health and safety, especially for outdoor workers or those indoor workers not benefiting from cooling systems. In some places, workers have begun striking in protest against working in unsafe conditions. For example, employees of a ground service company at the airport in Larnaca, Cyprus, went on strike for two hours to protest working in hot temperatures, resulting in flight delays and queues for passengers. In July, Amazon delivery drivers held their first walkout over pay demands and safety standards after working in over 120 °F.
Unionized and non-unionized employees are pushing for additional regulations and protections during periods of extreme heat. These protections can include additional rest periods as well as more frequent shift turnovers, which can slow operations without careful coordination. The growing concern of climate change and heatwaves will continue to impact requirements for organizational resiliency planning so long as climate change continues to have devastating consequences, and it is critical that these initiatives are prioritized in H2 2023 strategies and beyond.
Wages and government policy driving labor strikes
Global labor strikes are most likely to impact the agriculture, prepared products, automotive, aerospace, petroleum, natural gas, and minerals sectors. Wages, followed by government policy and company policy, accounted for the top grievances globally in Q2. Overall, the majority of strikes in Q2 were unionized, but significant numbers of general and non-unionized strikes also occurred. It is predicted that wage-related grievances will continue to drive labor strikes through at least the end of 2023 as wages fail to keep up with inflationary and cost-of-living pressures.
European Union regulations prioritizing the environment
The European Union recently proposed a Green Claims Directive to reduce the prevalence of greenwashing. Greenwashing occurs when companies make false, misleading, or unsubstantiated claims about the environmental impact of a product. The proposed legislation would introduce minimum norms on how companies validate environmental claims and how these may be communicated.
Additionally, companies will be required to independently verify “green claims” with scientific evidence. This new directive continues a trend of EU regulators working to increase environmental obligations as the world works to limit global warming to 1.5 °C. An awareness of new regulations and their implementation dates is essential for organizations to keep ahead of the curve. The Carbon Border Adjustment Mechanism is one to watch out for, with the transitional period beginning October 1, 2023.
Inflationary pressures, increasing heatwaves, and labor strikes driven by wages and government policy will continue to disrupt business operations for many months to come. With the right strategies in place and an understanding of new regulations, businesses will be able to protect themselves against these operational and supply chain risks.
To see the full presentation “Quarterly Risk Intelligence Outlook.” please download the slides in the Special Reports section on SCREEN News and watch the webinar on demand. For more supply chain, digital trust, and environmental, health, and safety topics that should be at the top of your list, visit BSI’s Experts Corner.