supply chain risk management · digitizes your end-to-end supply network helping you assess risk...
TRANSCRIPT
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Supply Chain Risk Management: transforming risk into a competitive advantage
Webinar
March 19 2020
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Welcome and introduction
Sophie Roberts
(moderator)Conference ProducerCommercial Risk
Jean-Pierre Krause
Global Head of Risk EngineeringCommercial InsuranceZurich Insurance Group
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Agenda and guest speakers
Welcome and introductionSophie Roberts and Jean-Pierre Krause
How technology, insurance and risk engineering can build supply chain resilienceHeiko Schwarz
Anchoring technology and services in an organizationOtto Kocsis
Q&Awith all speakers
ConclusionSophie Roberts and Jean-Pierre Krause
Sophie Roberts(moderator)Conference ProducerCommercial Risk
Heiko SchwarzManaging Director & Founderriskmethods GmbH
Jean-Pierre KrauseGlobal Head of Risk EngineeringCommercial InsuranceZurich Insurance Group
Otto KocsisPrincipal Business Interruption & ResilienceRisk EngineeringCommercial InsuranceZurich Insurance Group
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How technology, insurance and risk engineering can build supply chain resilience
Heiko Schwarz
Managing Director & Founderriskmethods GmbH
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3+ critical earthquakes each day
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48 insolvencies per day –in Germany alone
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Every 54 hours a supplier site is burning
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50.000+ supplier sites affectedby Corona pandemic outbreak
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Are you prepared to protect your business?
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Supply Chain and Enterprise Risk Management Challenges
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Still unsatisfactory setup in most enterprises
How can I improve myinsurance coverage?
Insurance
How to detect only the relevant threats that really impact my supply chains?
TechnologyHow can I automate the risk management process to be efficient and focus on prevention?
Where do I get advice how to mitigate/engineer risks?
Expertise
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nexusnoun [C usually singular] • formal
/’nek.ses/
an important connection between the parts of a systemor group of things
e
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The nexus of forces
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Converges powerful levers to a new solution
Solution
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Common goals along the entire supply chain/value creation
The nexus of forces
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Should drive cross functional collaboration and additional value for the enterprise
Improve insurance coverage
Avoid cost increase Protect the brand/
reputation Improve Supply
chain efficiency
Reduce cost of risk Reduce cost Contribute to a
better world Deliver according
to promises
ERM PROCUREMENT CSR SUPPLY CHAIN
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Be risk aware React fasterBe proactive
Zurich Supply Chain Risk Management Services
Action Planner& Risk Engineering
advisory
Impact Analyzer& Risk Engineering tools
Risk Radar
Your supply chain risks – be prepared and prevent loss
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Identify your supply chain threats
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An interactive world map digitizes your end-to-end supply network helping you assess risk exposure in an instant
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Identify risky trends within your supply network
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Dashboard and analytics show predictive risk patterns and insights that help you bring the risk perspective into every decision
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Assess the impact exposure of the supply chains
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Customizable impact profiles help you understand your suppliers’ criticality by category, enabling you to decrease the magnitude of risk impact to your business
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Mitigate your risks and profit from risk engineering expertise
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Leverage Action Planner library and mitigation plans with Risk Engineering advised scenarios on loss prevention strategies to better manage your total cost of risk
On the office wall
Showcase your supply chain risk management practice internally and to clients
Embed risk everywhere
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On the go
Receive timely risk notifications so you can stay informed of new and evolving threats wherever you are
Embed risk everywhere
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Embed risk everywhere
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In a meeting
Make the next conversation with your supplier or team a productive one. Bring the risk perspective into every review or decision
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AI powered Risk Intelligence
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By leveraging Artificial Intelligence, solution identifies the real threats to a supply network
riskmethods Risk IntelligenceTM
Covering all types of risk
Financial • Reputational • Natural DisasterMan Made • Geo-political • Cyber
Alerts & Scorecard update
AI masters big data search
Millions of web pages & databases
Quality check & data enrichment
World leading noise cancellation guarantees relevance and optimal adoption
Video: how enterprises can react faster and plan business continuity based on the Corona (nCoV) outbreak scenario
Click above to launch video
Covers global media publications 24/7 and many expert risk databases
Threat detection for all supply chain actors (suppliers, customers, warehouses, seaports,…)
Multi-language media monitoring covering 90%+ of all supply chain relevant languages
Detection of impacted geo-zones
100% automated risk intelligence feeds and ongoing updates
World leading noise cancelation to provide relevant insights only
Unique Risk Intelligence is powered with applied and awarded AI/machine learning algorithms
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Powerful digital levers
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AI-BASED NOISE CANCELLATION
BIG DATA MONITORING
PREDICTIVE INSIGHTS
MULTI-LAYERED RISK SCORING
AUTOMATED GEO-MAPPING AND DATA VIZUALIZATION, SUPPORTED
BY MACHINE-LEARNED LOGICS
NEGATIVE PATTERN DETECTION ACROSS
BIG DATA SETS
MOBILE AND SMART DEVICE SUPPORTED APPS (APPLE WATCH, APPLE TV, MOBILE APPS)
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Are risk aware
Leaders in Supply Chain Risk Management
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React faster Are proactive
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Leaders release huge value from supply chain risk management
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Protect your bottom and
top-line
Avoid cost increases and revenue
losses by securing critical supply
Maintain Business Continuity
Shorten crisis-reaction time by >90%
Avoid reputational
damage
Maintain your company’s brand equity
and reputation
Secure compliance
Secure regulatory compliance
of your supply chain
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The best of the best are prepared
“Interact with your procurementdepartment and connect with us!“
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Anchoring technology and linking to capabilities in your organization
Otto Kocsis
Principal Business Interruption & ResilienceRisk EngineeringCommercial InsuranceZurich Insurance Group
Examples of changing triggers / challenges for supply chains
Current challenges for global business and supply chains
281. Allianz Risk Barometer 2020
NatCat intensified by Climate Change Tax and trade war, Brexit
Corona, pandemics –enabled through
globalization transportation
Cyber: Number 11
COST in value chain
RIS
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small high
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Manage costs & risks
acceptable risk
Current challenges for global business and supply chains
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Cost efficient resilient
value chain
toorisky
toocostly
1. McKinsey Feb 2020 Resilience in transport and logistics
What is needed to be competitive and successful?
1. Rebalance production cost / LEAN and RESILIENCE→more than twice share holder return1
2. AGILITY and FLEXIBILITY in processes & supply chainfrom supply chain visibility to capability for ongoing optimization
3. Risk management• Ensure team collaboration with risk owners:
For Supply Chain it’s Procurement
• Alignment: work to include risks into procurement KPI’s
Covid-19 Fatality 0.6%-4%; >80y ~15%; ♀4% ♂7% Italy1)
Reproduction number:~3 new infections per infected personInfluenza <2; Ebola <2
Infection through respiratory droplets (coughs, sneezes) < 2 m Importance of hygiene & “social distancing”
Dec 1 First Covid-19-case in Wuhan; Dec 30 WHO informed
Jan 22 Wuhan (11m inhabitants) lockdown (excluding public services, virus prevention...)
Jan 23 Hubei province lockdown (57m inhabitants) until March 10 (1½ months)
Jan 29 Lockdown: 324m inhabitants2) & Partial lockdown (travel & transport): +171m inhabitants3)
Feb 10-17 Many Chinese regions resume production (after ~3 weeks)
Mar 5-12 Oil price reduction by about 40%; stock market impact about 25% S&P 500 (Mar 12)
Mar 10 China new infections <100/d - Partial lockdown in Italy (60m inhabitants, 1½ months after Hubei)
Mar 16 Center of Covid-19 spread: EU - Partial lockdown: EU & countries, border controls, retail & hospitality closed
Mar 17 Covid-19 reached all US states; 850bn$ US Coronavirus plan4)
Corona virus timeline
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Covid-19
1) WHO2) https://www.lexology.com/library/detail.aspx?g=63c3fc27-03ee-4ee6-9a22-7fdc9074c01f 3) Reuters Feb 14 4) NYTimes 17.3.2020 5) NZZ 18.3.2020
1 month
Barriers to recovery
Workers shortage: 170m migrant workers in 14 day quarantine
Measures in China:
• Daily temperature readings
• Face masks
• Minimum distance of 2m
Corona virus impact on global business in China
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Covid-19
1) Washington Post 12.3.2020 2) IATA Mar 5 2020
Automotive Lockdown
Jan 29 - Feb 10: China: Tesla, Ford, PSA Group, Renault, Nissan Japan, Honda, Toyota (2)GM, Mercedes-Benz, Hyundai, Volkswagen
S-Korea: Hyundai (1.4m cars per year)
Feb 10 - Mar 10: Hubei: Nissan, Toyota, Honda, PSA Group, Renault
Impact: 82% reduction in Chinese car sales Feb 20201) – due to lack of DEMAND
Autoexpress UK 20160318: Hyundai's factory – The biggest in the world
Aviation: Airbus
Electronics & Comms: Apple, Foxconn, Yageo, Sony (smartphone image-sensor business)
Events & culture: sport events & cultural performances
Retailers & food-chains closed: Starbucks (2,000 stores), IKEA, McDonalds (300 restaurants), H&M, Adidas…
Airlines: Flights to/from China cancelled until end March; impact 113bn$2)
Tourism: Hit hard, both Chinese tourists abroad and tourists in China & region
Financial Impact Demand Side Impact
Why Covid-19’s business impact is more severe
321) European Automotive Manufacturing Association 2) Ecco SRF: 9.Mar2020 3) Survey Kloepfel consulting, Jan 2020
Economist Feb 15th 2020
1 Multinationals have often complex and lean value chains.They therefore are often exposed to important SC risk
2 Economic role of China: 16% of global GDP 2019; 4% 2003 SARS, - Motor vehicle production 29% of global 2018 (8% in 2003)1)
- Pharma: 50% and for generics 80% intermediate products are produced in China2)
- Textile & apparel 40% of global / furniture 26% of global
- Importance in criticality of components: 81% companies rely on Chinese suppliers3)
3 Covid-19 lockdown Chinese regions are key to GLOBAL industries
Electronics: most advanced chip plants, e.g. for smartphone-flash memory
‘Optics Valley’: telecoms networks components: 25% of global optical-fiber cables
4 Global spread of Covid-19
Waves of impact - China: 3+ month duration (new infections) plus recoveryNext waves Eastern Asia now in Europe and US
Western globalized regions tend to be affected heavily
Supply Chain Impact
COVID-19Covid-19 Monitor• Monitor spread in your critical countries
# new cases / initial date• Policy measures of critical countries• Ensure automatic information monitoring
and alerts
Production impact• Agree on key scenarios of future
spread and impact
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Customers• Assess impact on
end-customer demand• Focus on strategic & growth markets• Refresh customer loyalty
Contact customer (B2B)• Coordinate transparently info on
- needs, buffers (stocks, transit) and- delivery capabilities
Supply Chain• Stabilize SC: flexibility resilience• “Business at risk” with critical suppliers• Key production locations (tier 2 ,..)• Scenario planning, S&OP
Mitigation & Alternatives• Available inventory in value chain
after sales, faster transport,…• Alternative suppliers – be fast
Leadership• Cross-functional crisis team• Scenario based approach• Financial stress tests
Communication• Ensure transparency, one source of truth
Workforce • Protect employees, travel restrictions,..• Identify critical functions• Ensure delivery - keeping flexibility
Organizational Response
Analyze Impact should supplier not deliver
If impact > risk appetite or endangering market position, then…
Mitigation
identify smart alternatives
together with procurement, product management,
sales
Anchor Collaboration with Procurement as well as technology in the organization
• Supply chain risk management maturity has to evolve
• Since you might have >100 suppliers, use Risk Intelligence-tools to assist you
• Consider early warning capabilities – since time is key to ensure alternatives if supplies are scarce
Offer: Daily COVID19 reports and visibility of your supply chain
• Riskmethods and Zurich have joint forces to set-up this offer:
• COVID19 – daily analysis report: https://go.riskmethods.net/z/daily-corona-update
• Supply chain visibility kit: https://www.riskmethods.net/partners/zurich-corona-virus-scv-kit/
Supply Chain Risk Management
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Organizational requirements
Key Supply Chain Risk Management steps
Understand the Supply Chain
Mapping the Supply Chain
How much business is at risk(not spend) with each critical
supplier?
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Q&A
Sophie Roberts
(moderator)Conference Producer, Commercial Risk
Jean-Pierre Krause
Global Head of Risk EngineeringCommercial Insurance, Zurich Insurance Group
Heiko Schwarz
Managing Director & Founderriskmethods GmbH
Otto Kocsis
Principal Business Interruption & Resilience, Risk Engineering Commercial Insurance, Zurich Insurance Group
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Conclusion
Sophie Roberts
(moderator)Conference ProducerCommercial Risk
Jean-Pierre Krause
Global Head of Risk EngineeringCommercial InsuranceZurich Insurance Group
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Thank you for your time
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