Supply chains are more complex and more vulnerable than ever. From international shipping delays to cybersecurity threats, even a single disruption can have a ripple effect across your entire business, damaging customer trust and cutting into profitability.
According to a recent survey, 74% of risk managers reported at least one supply chain disruption within the past year, causing everything from lost revenue to reputational damage.
Common Supply Chain Risks – Supply chain disruptions can stem from:
- Natural events (e.g., storms, earthquakes, pandemics)
- Human actions (e.g., labor strikes, terrorism, cyberattacks)
- Technical failures (e.g., power outages, software issues)
Worse yet, you may be held legally responsible for issues caused by your suppliers, especially if a defective part or product leads to injury or loss.
Steps to Reduce Supply Chain Exposure – To stay resilient, businesses should focus on these key areas:
- Vet Suppliers Thoroughly
- Review credit ratings (Moody’s or S&P)
- Check insurance coverage (and confirm it’s active)
- Conduct periodic audits
- Strengthen Contracts
- Work with legal counsel to draft clear terms
- Include indemnification, hold harmless, and defense clauses
- Build a Risk Management Plan
- Create a business continuation strategy
- Diversify suppliers when possible
- Identify critical vulnerabilities and address them proactively
- Transfer Risk Through Insurance – Depending on your operations, you may benefit from:
- Business income interruption coverage
- Marine/cargo insurance for overseas shipments
- Commercial general liability and D&O insurance
- Special endorsements for supply chain disruptions
Stay Prepared
Supply chain disruptions are often out of your control, but the impact doesn’t have to be. With proactive planning, solid contracts, and the right insurance in place, you can keep your operations moving, even when things go off track.
McHugh Insurance Group can help you assess your current exposures and build a supply chain risk strategy that aligns with your business. Contact us to learn more.