RISK REVIEW


25


ALLIANZ STUDY WARNS OF MORE SUPPLY CHAIN DISRUPTION TO COME


The latest Allianz Safety and Shipping Review 2020 warns of even more upcoming risk of supply chain disruptions and losses from trade wars, regional conflicts, civil unrest, piracy and cyberattacks.


The Review highlights:


Political rivalries played out on the seas


Political risk has become a pressing topic for supply chains and this is often played out on shipping and trade which acts as pawns in disputes, with changes such as import and export regulations affecting some of the world’s busiest cargo routes and ports. This brings additional costs with changes to trading volume or cancelled shipments, as well as heightened security risks and potential product thefts which result from more chokepoints at ports and the use of alternative cargo routes.


For example, as political rivalry between the US and Iran intensifies, there has been an increased number of attacks against vessels in the Gulf of Oman and off the coast of Yemen. Likewise, the South China Sea, where China and the US are competing for influence in Asia Pacific, is fast becoming another hotspot for thefts, collisions and groundings.


Supply chains caught in conflicts and civil unrest


Geopolitical risks have heightened the occurrence of civil unrest and protests, as seen


in Hong Kong, Chile and India. According to a Verisk study, 47 countries witnessed a surge in civil unrest in 2019 and these numbers are likely to increase. Such unrest may implicate ports in terms of the ability to secure cargo and crew, and to access ports safely. Shipments that are caught in areas of unrest also face risks of damage and losses. Resilience and agility in supply chains have now became an increasing focus, highlighting the need for logistics providers to be equipped with secure tracking systems for improved visibility and communication.


Piracy, kidnapping and armed robbery


According to the International Maritime Bureau, 162 incidents of piracy and armed robbery against ships worldwide were recorded in 2019. 90% of kidnappings reported occurred in the Gulf of Guinea. Given the increase in political and economic uncertainties today, these attacks remain a serious threat to shippers and supply chains.


Lina Li, Chair of TAPA Asia Pacific, emphasized: “TAPA Standards are increasingly being written into contractual agreements with outsourced manufacturing and logistics service providers. This will ensure that all parties are accountable for the shipper’s assets. Transferring risks and maintaining a level of compliance has become a key method to reduce supply chain risk, prevent losses and ensure that goods reach markets safely. Achieving TAPA certification creates accountability for logistics companies and greater assurance for stakeholders in the


transportation of vulnerable and high value assets.”


Technology reliance presents cyber risks


With the outbreak of the coronavirus, supply chains are becoming increasingly dependent on new technologies and computer software such as Industrial Control Systems (ICS). However, this digital transformation is not without consequence. It has heighted the risk of cyberattacks, from crippling ports and terminals to spoofing attacks on ships. Allianz has received reports of companies facing a 400% increase in attempted cyberattacks since the start of the pandemic.


“The biggest challenge for industry players is to maintain supply chain resiliency as the world is faced with rapid development of new technologies that may bring forth many uncertainties. Only those with high agility and sustainability to adapt to these changes can survive to maintain profitability and provide the most reliable services to their customers. As the supply chain industry continues to evolve, TAPA will constantly review and adapt these elements into the Standards, services and technologies we are deploying to cope with industry needs and improve our working efficiency. The 2020 revisions of TAPA’s FSR and TSR Standards has been updated to provide the latest industry security requirements for our members in managing and securing their operations in this evolving climate,” Lina Li added.


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