Can we predict all risks

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 Risks in a SCM

• Change is inevitable in modern supply chain management, and risk

management is essential to success 
• Risks evolve and become more prevalent with time
• Risk management strategies of yesteryear are ineffective in the
changing landscape, and no type of transport can avoid risks
• Risks exist in land, air and ocean freight
• They’re inevitable and unavoidable
• Poor grasp of hazards in your supply chain will increase freight
spend and diminish brand value

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 Risks in a SCM

• Political and Government Changes

• Economic Instability
• Extreme Weather Events
• Environmental Risks
• Catastrophes
• Connectivity
• Cyber Attacks
• Data Integrity and Quality
• Supplier Consistency
• Transport Loss
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 Political and Government Changes

What are the risks

• In Western Europe, Brexit has had an adverse effect on trade,
creating volatility and weakening the British pound

• This example reflects only one area of concern and changing

political affiliations and governing parties in countries around the
globe will increase the risk to trade

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 Political and Government Changes

How to reduce these risks

• Maintain a stricter level of compliance in operations, even if
governments allow for a less-stringent approach

• These reduce the risk of compliance violations and safeguards

against the enforcement of new regulations

• In addition, shippers should look for non-associated carriers that

operate outside of affected governments, "third-parties," to handle
trade needs

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 Economic Instability

What are the risks

• Economic instability represents another threat to global
trade

• For instance, the bankruptcy of South Korea's 7th largest

shipping company (Hanjin Shipping) led to a dramatic reduction
in global supply chain shipping capacity

• Capacity fell by 3 percent, and up to $14 billion in cargo was

unable to dock

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 Economic Instability

How to reduce these risks

• Consider ways to increase employment rates in countries you
operate within

• For example, consider launching apprenticeship programs,

encouraging supply chain careers among secondary-school
students and engaging with the community

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 Extreme Weather Events

What are the risks

• Extreme weather represents one of the most significant risks to
ocean freight on the globe

• Tropical storms can toss ocean carriers aside like trash

• Depending on the route, tropical storms may not have been a

significant threat in recent years

• However, global climate change indicates tropical storm threat is

on the rise
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 Extreme Weather Events

How to reduce these risks

• Shippers need to re-evaluate ocean route use and determine

which carriers can increase shipping in anticipation of tropical
storms

• This allows for flexibility to scale back operations during

tumultuous times

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 Environmental Risks

What are the risks

• Impact on the environment makes up another critical risk in global

trade

• Ecological responsibility and sustainable practices are both

forms of social responsibility, and as more laws are passed
governing the environment, ocean freight carriers will come
under greater scrutiny 

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 Environmental Risks

How to reduce these risks

• Source raw materials from reclamation centers where

possible

• Ensure all reclaimed products adhere to appropriate ISO

standards, and avoid the unnecessary disposal of wastes that could
otherwise be recycled

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 Catastrophes

What are the risks

• Catastrophes include human made and natural disasters that do

not fall into the weather-related category.

• For instance, earthquakes and famine are two catastrophes that

may affect global trade

• Up to 47 % of shippers do not have a backup plan for ensuring

continuity following a natural disaster or major equipment
failure
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 Catastrophes

How to reduce these risks What are the risks

• Develop a robust strategy for ensuring continuity following a

catastrophe

• This may include the devotion of resources to maintain

operability, use of cloud-based tools and more

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 Connectivity
What are the risks

• In the 24/7 world of modern trade, global supply chain risks also
exist within the connectivity of today's systems

• Although systems can be integrated through open-source

software, integration and modification of systems increase risk

• Each modification may result in added costs for new upgrades,

and poorly integrated systems could lead to bottlenecks and
disruptions  

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 Connectivity
How to reduce these risks

• Create a backup data resource

• Decentralize data storage

• Ensure system connectivity is on a secure network

• Eliminate vulnerabilities to your systems, such as encrypting

personnel PCs, tablets and smart phones

• When integrating systems, avoid unnecessary modifications, and

work with expert supply chain systems’ integrators to maximize
efficiency and profitability

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 Cyber Attacks

What are the risks

• Cyber attacks have become a predominant risk in modern supply

chain management

• Someone with malicious intent could bring down entire supply

chain networks and force freight rates to skyrocket

• Cyber attacks are also becoming a weapon for terrorists too, so

any person, government or agency could be working to undermine
your digital footprint

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 Cyber Attacks

How to reduce these risks

• Choose supply chain systems' vendors with a proven record of

maintaining stringent cyber security protocols, including AES 256
encryption

• Limit personnel access to the system to those necessary for

shipment processing and maintain the strong physical security
of your facilities

• Penetration testing and a strong IT team can also reduce the risk
of cyber-attacks

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 Data Integrity and Quality
What are the risks

• Data integrity refers to the quality and strength of data for use in
supply chain management

• The wrong freight procurement data could leave shippers with

reduced profitability and opened doors to failure

• Also, more companies are apt at isolating their data from others,
increasing risk

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 Data Integrity and Quality
How to reduce these risks

• The fear of a breach is omnipresent, but data integrity can be

strengthened by sharing it with the proper supply chain
partners

• Validate data for accuracy and timeliness. Old data is bad data

• Systems that leverage real-time data monitoring can be a crucial

step in increasing data integrity and quality

• Also, consider the use of block chain-based technologies to

eliminate erroneous changes in data retroactively

• Shippers that do make the switch to collaborate with data can

increase data integrity and decrease ocean freight spend
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 Supplier Consistency

What are the risks

• Only  45% of suppliers can continue operating after a disaster

• Disruption in supplier consistency may be the result of any risk

coming to fruition

• Supplier consistency applies to manufacturers as well. Raw

and reclaimed materials are subject to disruption risk

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 Supplier Consistency

How to reduce these risks

• Procurement departments must take the full burden of

ensuring supplier consistency

• This is possible through the creation of a diverse supplier

network. Shippers should also expand available carrier routes to
meet changes in suppliers used

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 Transport Loss

What are the risks

• Where risk exists, the risk of losing the ability to transport

goods exists

• Even carriers with strong networks may suffer setbacks

considering risk, so having a plan to overcome these issues
is key to success

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 Transport Loss

How to reduce these risks

• Benchmark ocean freight rates to know if you are getting a

competitive price  

• Next, identify the carriers that service your ports, and explore
other carrier contracts and services that can be used when
current carriers are unavailable

• Furthermore, shippers should purchase cargo or freight

insurance where possible to create a safety net

• This also serves to reimburse customers or B2B partners for

lost freight and missed delivery deadlines

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 Proactive Risk Management Is Key to Ocean Freight
Success

• Know the top risks in global ocean freight management

• Failure to understand these risks is a risk itself, putting your

organization on the brink of profit losses and disruption

• Shippers must rethink risk management strategies to include

all potential risks in the global supply chain and how they affect
supply chain partners

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 Proactive Risk Management Is Key to Ocean Freight
Success

• The best-laid supply chain strategy is doomed without full risk

assessment and management

• Since benchmarking ocean freight rates enables data-based

decision making, it lends itself to better risk management

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