Anticipating Hidden Risk in the Supply Chain Using Advanced Analytics and Reducing Losses with Supplier Insurance Coverage

1. Anticipating Hidden Risk in the Supply Chain
Using Advanced Analytics and Reducing Losses
with Supplier Insurance Coverage
SEEING BENEATH THE SURFACE

2. Today’s Presenters
JON BALL
Senior Global Director, Analytic Consulting
Dun & Bradstreet
NICKWILDGOOSE
Global Supply Chain Product Leader
Zurich Insurance

3. AGENDA
Causes and Frequency of Supply Chain Disruption
Development of Risk Transfer Solutions
Prioritizing Actions Around “Tier N“ Analysis

4. Causes and Frequency of
Supply Chain Disruptions

5. 5
Business Continuity Institute Supply Chain Resilience 2016
Report – Supply Chain Disruption Related Economic Losses
70% of organizations impacted
2% experienced disruptions of 50m+ BCI Supply Chain Resilience 2016

6. 6
Top 10 Causes of Supply Chain Disruptions
26%
27%
27%
30%
46%
54%
59%
69%
71%
130%
0% 20% 40% 60% 80% 100% 120% 140%
Insolvency in the supply chain
Act of terrorism
New laws or regulations
Currency exchange rate volume
Adverse Weather
Outsourcer failure
Transport network disruption
Cyber attack and data breach
Loss of talent / skills
Unplanned IT or telecommunications
BCI Supply Chain Resilience 2016

7. 7
Supply Chain Disruptions by Supplier Tier
BCI Supply Chain Resilience 2016

8. 8
Importance of Supply Chain Sub-Tiers
HIDDEN RISK
51% of supply chain disruptions
originate with Tier 2 & Tier 3 suppliers
- Allianz Risk Barometer on Business Risk (2014 Report)
POORVISIBILITY
54% of executives admit that their firms
do not have visibility beyondTier 1
- KPMG
TOP PRIORITY
80% of the companies worldwide see
better protection of the supply chain as a
top priority
- Accenture
Tier 3
Company
Tier 1
Tier 2
VISIBILITY BARRIER

9. 9
Reputation
Partnerships/
Strategic Suppliers
Single Sourcing
Non-Damage
Disruptions Increasing
Market Shortages
Increased Complexity
New Business Models:
Globalization, Outsourcing, and Specialization

10. Development of Risk
Transfer Solutions

11. 11
RiskTransfer – Insurance History
Tier 3
Company
Tier 1
Tier 2
1. Initial focus of risk transfer
on property and business
interruption of insured
2. Physical damage atTier 1 suppliers

12. 12
Reduced fluctuations
in results
Balance sheet
protection
Protect brand
& reputation
Informed
decision making
Maintain customer
relationships
Tailored to your needs
Benefits of Taking All-Risk, Multi-Tier Approach
to Supply Chain Risk and Transfer

13. 13
Risks from Critical Suppliers:
Multi-Tier and Non-Physical
Natural Catastrophes
IT Failure
Labor Disputes
Transportation
Power Failure
Delays in Supplier’s Supplier
Supplier Insolvency
Political Risk
Failure at Critical Suppliers
Piracy

14. 14
 Based on anticipated loss of
profit and/or increased cost
of working
 Indemnity period and coverage
tailored to risk where possible
 Premium/limits calculated per
supply/supplier based on
the agreed limit
 Exclusions include quality
and growing risk
Tailoring Risk Protection to Exposures
 Agreed claims methodology
before inception or post loss
whichever is most appropriate
 Anticipated monetary
deductible equivalent to
approximately 10% of limit.

15. 15
Value Chain Risk Assessment Required for Transfer
Where is
the value?
What are
the risks?
How robust are the
control measures?
How bad
could it be?

16. 16
Suppliers risk management
Suppliers
relationships
Suppliers skills and
experience
Skills and IP management
Internal risk management
Business continuity
management
Vulnerability to accidents /
errors
Vulnerability to malicious
intervention
Regulatory issues Skills and IP management
Commercial contract
management
Product management /
new product development
Supplier selection
management
Supplier management
(financial strength)
Supply chain
performance
Economic Geographic Political Structural
Risk Assessment – Actionable Risk Insights

17. Prioritizing Actions Around
“Tier N“ Analysis

18. 18
Digitized Approach to Mapping Tier-N Suppliers And
Risk Assessment of Supply Chains
1. Map Supply Chains
(from Tier 1 to Tier N suppliers)
 Discover buyer-seller networks,
leveraging proprietary sources &
D&B’s DUNS#
2. Profile Risk of Each
Tier N Supplier
 Profile firmographic & risk
attributes
 Leverage D&B proprietary assets
4. Sub-Tier Risk
Assessment & Exposures
 Identify tier 1s with high risk
supply chains
3. Calculate Risk of Each
Supply Chain
 Risk of the tier 1s supplier
network
 Tier factor & Criticality factor

19. 19
Management by Exception
Maximize mitigating supply chain disruptions while increasing efficiencies – focus on the
‘smallest pool of Tier 1 suppliers with highest odds of performance issues down the road’

20. 20
Summary View (Tier 1;Tier 2;Tier 3 & Other Levels)
Capacity – client input

21. 21
Ajaxey Stamping – Distribution of Sub-Tiers by Country Risk
(Individual supplier view)

22. 22
Takeaways
 Your company’s performance is being impacted by supply chain disruption costs.
 Need to be proactive and prioritized in your approach to critical suppliers on a
multi-tier basis.
 Technology and risk transfer innovations are starting to be adopted by your
competitors.

23. Presenter Contact Information
JON BALL
Senior Global Director,Analytic Consulting
Dun & Bradstreet
ballj@dnb.com
+1-516-462-2417
NICKWILDGOOSE
Global Supply Chain Product Leader
Zurich Insurance
nick.wildgoose@uk.zurich.com
+44-787-588-6068

24. ThankYou!