Global risks, which go beyond a company’s ability to manage or mitigate, are currently being ignored by the freight industry as they do not easily fit into existing insurance framework. However, they need to be addressed as part of building both global and company resilience and the ability to take an unexpected sucker punch. “The nature of risks changes constantly,” says Eikos Risk Applications director Jason Freeman. In the 1980s, CFCs were considered the biggest global risk and a cyber-attack would have been considered science fiction,” he said, adding that global risks do not keep to neat 12-month periods and also cannot be taken in isolation. “We therefore cannot continue to look at risk in 12-month periods but rather ensure that we as an industry are continuously protected by looking beyond our typical insurance methods and ensuring more comprehensive coverage,” he said. The World Economic Forum’s Global Risks 2013 is the eighth in a series of top 50 global risks identified through an annual survey of 1 000 government, industry and academic experts, providing a strong projection of the kind of risks that will impact global trade. Freeman said the global risk that respondents rated most likely to manifest over the next decade – severe income disparity – came as no surprise. The risk rated with the highest impact was “major systemic financial failure”. The most worrying global risks though, according to Freeman, are the two that rated high in both the “most impact” and the “greatest likelihood” categories, which are, respectively “chronic fiscal imbalances” and a global ”water supply crisis”. Cyber-attacks, global governance failure and a failure of global climate change adaptation also received high ratings in the two categories, said Freeman. Natural disasters also often play havoc with a supply chain as the Japan earthquake and tsunami demonstrated in terms of the automotive chain. “As a result, the insurance markets have responded by creating trade disruption insurance which protects the supply chain further,” stated Freeman. INSERT & CAPTION Insurance markets have created trade disruption insurance to protect the supply chain. –Jason Freeman
