Supply Chain Disruption

Supply disruption is an unforeseen event that disturbs the normal flow of goods and materials. It regularly appears among the top five Emerging Risks on corporate radars. It takes many forms: 

• Financial risk, such as currency movement or insolvency. 
• Geopolitical instabilities causing disruption to trade and the movement of materials. 
• Failures of cybersecurity and malicious disruption. 
• Environmental risks, such as extreme weather events cutting off established supply routes.

Supply disruption impacts insurers in specialist markets such as trade credit, but also in mainstream sectors. Business interruption risks may be aggravated by price fluctuations and the failure to receive supplies. Product liability risks may be aggravated by low-quality substitute products being released to market. In extreme situations, D&O policies may be affected by securities class actions and corporate failures prompted by severe disruptions of supply.