Today’s complex supply chains increase vulnerability to both natural perils and manmade threats, such as cyberattacks and geopolitical volatility, allowing risks to transfer between organisations, sectors and continents. There are also interesting trends and drivers at work, shifting the landscape and requiring new collaborations and thinking between stakeholders.
Over the past six months, the WTW Research Network has been working to support Lloyd’s and their action leadership platform, Lloyd’s Futureset to explore how organisations are responding to supply chain challenges. The aim of the research has been centred on providing the insurance industry with a greater understanding of customer needs, identifying protection gaps and potential insurance solutions.
This work has connected colleagues and perspectives from across WTW to surface the challenges our clients are facing, and at the end of 2022 Lloyd’s and WTW co-launched the first report in a three-part collaboration.
‘From farm to fork: rethinking food and drink supply chains’ focuses on the critical challenges facing the food and drink industry due to the growing interconnectedness and complexity of global supply chains.
The sector is one of the largest industries, with a global revenue of almost $US 11 trillion (2021) that underpins global resilience and food security but faces a complex risk environment from natural perils to man made threats. There is also further change on the horizon. As the world’s population is forecasted to reach 10 billion by 2050, and demand expected to continue to grow significantly – land twice the size of India is expected to be needed by that time to support a 70% increase in food production. Meeting this need will require action across the value chain: eliminating pests and diseases; preventing loss in transport and distribution through poor storage; reducing food waste by retailers and consumers; and through supporting the transition to a low carbon economy.
We continue to deepen our understanding to drive improved supply chain resilience and to empower food and drink organisations.”Sue Newton | Food and Drink Practice Leader GB, WTW
“This Lloyd’s Futureset and WTW Research Network report is part of our ongoing commitment to keeping pace with the changing risk landscape to help protect food and drink businesses and support their successful growth. We continue to deepen our understanding to drive improved supply chain resilience and to empower food and drink organisations’ in optimising their risk protection in the face of ongoing volatility, and this work with Lloyd’s brings an added perspective to this.” Sue Newton, Food and Drink Practice Leader GB, WTW
The report outlines a practical roadmap based on increased collaboration between businesses, brokers and insurers, which identifies opportunities for the insurance industry to innovate in the protection it offers business as well as setting out how supply chain risk management technologies, including data capture and visualisation can help to improve resilience.
Rebekah Clement, Sustainability Director at Lloyd’s said: “In today’s global economy, the food and drink industry is no stranger to the effects of shifting geopolitics and economic uncertainty. It is arguably more important than ever that businesses ensure the safe and timely transportation of critical and often perishable products which maintain a level of balance for global food security.
Whilst insurance cover for supply chain risks does exist today, the findings in our research point to a lack of alignment between shifting key risk drivers for food and drink business and their current insurance cover. Uniquely positioned to respond, through initiatives like Lloyd’s Futureset, the Lloyd’s Lab and the our leadership of the Sustainable Markets Imitative Insurance Task Force, the Lloyd’s market can further open lines of communication between food and drink businesses and their insurers and look to this research as roadmap for potential product innovation”.
While 82% of businesses have at least some insurance for extreme weather impacts to their supply chain, less than a third (31%) believe that this is sufficient to address the risk
82% of businesses have at least some insurance for extreme weather impacts to their supply chain
31% less than a third believe that this is sufficient to address the risk
In 2023, together with Lloyd’s Futureset, we will be focusing on the semiconductor industry and transportation and logistics. Semiconductors are produced through a complex global and interconnected value chain, and transportation and logistics underpins all supply chains regardless of industries – the movement of goods and components is central from production through to delivery.