Globalmanufacturingriskreport2024/2025

Howtheindustryviewsitsopportunitiesandchallenges

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CONTENTS

Introduction3

Keyfindings

3

Opportunitiesandobjectives

5

Risksandchallenges

8

Supplychainandgeopolitics

13

ESGandclimate

17

Riskmanagementandresilience

20

Conclusion

24

Surveysampleandmethodology25

Aboutthesurvey

When

September–October2024.

Who

400seniordecisionmakers,including

owners,CEOs,CFOs,CROsanddirectorsandmanagersofrisk,finance,operations,humanresources,communications,

complianceandmarketing.

Where

CountriesacrossEurope,NorthAmerica,Asia-PacificandLatinAmerica.

Sectors

Electricalequipmentandappliances,

computersanddevices,clothesand

textiles,chemicals,petroleumproducts,plasticsandrubberproducts,metals

andmetalproducts,furniture,wood

productsandpaper,machinery,printing,transportationequipment.

Size

18%ofcompaniesvaluedUS$250m–US$500m;23%US$500m–US$1bn;

28%US$1b–US$5bn;15%$5bn–$10bn;18%overUS$10bn.

Findfulldetailsofoursampleandmethodologyonpage25.

Introduction

What’sthefutureformanufacturing?

Thisisatimeofhugetransformationandpossibilityinmanufacturing,assmarttechnologiesmakeproductiongreener,saferandmoreefficient.

Butit’salsoaneraofextraordinaryvolatility,uncertaintyandrisk.

Astheindustryheadsintothesecondhalfofthe2020s,bothoftheserealitiesholdtrue.Advancedmanufacturingsystemsofferhugepotentialto

optimizeoperationalefficiency,managesupplychainsandrespondtofast-changingdemand,whileimprovingsustainability.

Ontheotherhand,threatssuchastradewars,

cybersecurity,economicinstabilityandsupply

chaindisruptionloomeverlargerinamoreuncertainworld,puttingpressureonprofitabilityandgrowth.

Howistheindustryadapting?

Inourglobalmanufacturingsurvey,weasked400

seniordecisionmakersfromaroundtheworld

howtheyviewthisconflictingandfast-changing

landscape,whattheyseeastheirgreatestchallengesandopportunitiesandhowaretheymanagingtheir

risksandbuildingresilienceforthefuture.

Wefoundthatfearsaboutcybersecurityare

dominatingasdependenceontechnologyincreases,withmalwareattacksandthethreatofgrayzone

aggressionbystateactorsrising.Butthereis

optimismtooabouttheopportunitiesofsustainablemanufacturingandthepotentialoftechnologiestodeliverefficienciesandunlocksolutionstotherisksandissuesmanufacturersface.

Keyfindings

Sustainabilityistopopportunity

63%rankedsustainablemanufacturingamongtheirgreatestbusiness

opportunities,signalingadesireto

turnchangeintobusinessadvantageanduseitspotentialtoattract

customersandinvestors.

Cyberisbiggestriskfactor

53%namedcybersecurityamongtheir

greatestriskstobusinesssuccess,while60%saiditwastheirbiggestsupplychainrisk,reflectingariseinmaliciousactivitybycriminalsandstateactors.

Fearsoftradebarriersarerising

76%ofmanufacturerssaidtradedisputesandprotectionismwereamongtheir

greatestgeopoliticalconcernsaspoliticalinstabilityincreasesuncertaintyfor

businessesandsupplychains.

Productliabilityuncertaintiesgrow

41.5%didnotagreethatit’sclearwhoisresponsiblewhenaproductfails

betweenthem,thecomponentsupplierorsoftwaredevelopers,posing

contractualandliabilityconcernsformakersofcomplexproducts.

Managingrisksismorechallenging

12%saidtheirabilitytomanageand

mitigatetheirriskswascompletelywithintheircontrol,suggestingfirmsarefacingawideningrangeofexternalfactors

beyondtheirabilitytoinfluence.

Greatestopportunities

Sustainablemanufacturing63%

Cybersecuritythreats53%

Geopoliticaluncertainty

In2025,companiesfacerisingeconomic

uncertainty,giventhenewUSadministration’stendencytousetariffsasabargainingchip.

Globalizedfirmsfaceprofoundstrategic

questionsabouthowfartheUSandEUwillgo

indecouplingfromChina.EscalationofconflictsinEuropeandtheMiddleEastwillremaina

threat.Thiswilltestcompanies’resilienceandincreasethepotentialforbusinessinterruption.

Supplychaindisruption

Aswellastradeandpoliticaltensions,the

growingcomplexityandinterdependency

ofsupplychains,aswellastheadoptionof

technologiessuchasAIandassociatedcyber

securityconcerns,couldincreasetheriskof

disruptionacrossmultiplegeographiesand

industries.Companiesshouldstrivetoachievefullvisibilityovertheirsupplychain,identifyandassesstheriskslinkedtotheircriticalsuppliersanddeveloptheirmonitoringandresponse

capabilityforunexpectedevents.

Cyber-crimeandstateaction

Thethreatofbadactors,bothcriminals

andstates,targetingcriticalinfrastructureandmanufacturing,isagrowingconcern.

Rapiddigitalizationofsystems,operational

technologiesandprocessesareexpandingtheITfootprintandthesurfaceareaforpotentialcyber-attacks.Firmsshouldregularlyreassess

theirvulnerabilitiesandstrengthentheircybersecuritycontrolstoreducerisks

andimproveresilience.

Extremeweatherevents

Asextremeweathereventsbecome

morefrequentandsevere,theimpacton

infrastructure,supplychainandrawmaterial

availabilitywillincrease,leadingtomore

frequentdisruption,highercosts,and

operationalchallenges.Businessesshould

identifystrategiestoenhanceresilience,

implementweathermonitoringsystems,and

developcontingencyplanstokeepoperations

runningsmoothly.Wheretheriskistransferable,forexamplethroughbusinessinterruptioncover,organizationsshouldensuretheirexposuresareproperlycalculatedanduptodate.

Opportunitiesandobjectives

Businessesareprioritizing

sustainability,stabilityandquality

Beinggreenisoftenseenmoreasacostandaburdenthanaprofitablebusinessproposition.Butoursurveysuggeststhatperceptionischanging,asbusinesses

begintoembraceitspotentialtoattractcustomers,investorsandemployees.

Sustainablemanufacturingemergedasthenumberonebusinessopportunityoverthenexttwoyears,ranked

byalmosttwo-thirds(63%)ofbusinessleaders(70%inAsia-Pacific),withsustainableandrecyclableproductson51%.

Globalproductionindustries,includingmanufacturing,accountformorethan20%ofglobalemissionsand

54%ofenergyuse.1Despiteapushbackagainstthe

greenagendainsomecountries,requirementsto

reportandreduceenvironmentalimpacts,including

emissionsandwaste,arebecomingmoreembedded

inlawinjurisdictionssuchastheEU(seeESGand

climatesection,page17).Thiscanbepainful,requiringmanufacturerstorethinktheirstrategiesandmake

difficulttrade-offs.

Butitseemsthat,despitethecostandchallenges

involved,companiesareturningthatpressureinto

abusiness-winningpositive.Byadoptingcleaner

manufacturingprocessesandsustainablematerials,theycangainfirstmoveradvantageandburnishtheirreputationforinnovationandqualityimprovement.

Inthelongterm,usinglessenergyandproducinglesswasteshouldalsotranslateintoloweroperatingcosts.

1WorldEconomicForum

/impact/carbon-footprint-manufacturing-industry/

Newtechnologiescomewithchallenges

Giventhescaleoftechnologicalchangein

manufacturing,it’ssurprisingtoseeartificial

intelligence(41%)andsmartfactories(39%)lowerdowntheopportunitieslist.Thismightreflecttheteething

painscompanieshaveexperiencedintegratingnewdata-driventechnologieswithexistingoperational

technology.Almosttwo-thirds(66%)saidtechnologychallengeswereamongthegreatestobstaclesto

achievingtheirbusinessobjectives.

Firmsmayalsobenervousabouthowtechnology

couldincreasetheirvulnerabilitytocyber-attack,

whichemergedasthenumberoneriskinoursurvey(seeRisksandchallengessection,page8).

Tailoringproductstocustomers

49

54

51

51

41

Automation

48

56

51

43

43

Advancedmaterials,e.g.composites/alloys/biomaterials

42

43

49

37

40

Artificialintelligence(AI)

41

48

37

40

39

Smartfactories

39

37

37

40

40

Firmsfocusonstablegrowth

Whenweaskedrespondentsabouttheirmostimportantstrategicobjectivesforthenexttwoyears,theanswerssuggestanindustryfocusedonstability,resilienceandgrowth.Almosthalf(48%)saidqualityimprovement,

45%organicgrowth,stabilizingthebusinessandsupplychainresilience.

Inatimeofuncertainty,itmakessensetofocuson

thesefundamentals.Ifyougetthequalityofyour

productandthereliabilityofyoursupplychainright,

thesefactorscangoalongwaytoimproveyouroverallriskprofileandgiveyourbusinessamuchbetter

chanceofcompetingandthrivingintothefuture.

Butfirmsstillfacechallengesfindingtherightpeople—56%rankeddifficultiesattractingandretainingtalent

amongthegreatestobstaclestobusinessobjectives.

Thishasbeenapersistentissueformanufacturerssincethepandemicandseemslikelytoremainchallenging

asthepaceofdigitalizationanddecarbonizationincreases,requiringnewskillsandamoreagilemindsetfromemployees.

0%10%20%30%40%50%60%70%80%90%100%

Qualityimprovement

48

43

44

54

52

Organicgrowth

45

45

42

47

47

Stabilizingthebusiness

45

47

46

44

43

Supplychainresilience

45

41

39

52

47

Digitaltransformation

43

41

41

42

46

Increasingliquidity

40

39

45

37

39

Growththroughacquisition

40

36

39

47

37

Risksandchallenges

Cyberrisksareincreasingas

digitaltransformationaccelerates

Manufacturinghasbecomethemost

cyber-attackedsectionoftheeconomyinrecentyears.Withincidentsonthe

increaseglobally,andevergreater

relianceonbothITandoperating

technology,thethreattotheindustryisgrowing.

Thesetrendshavepushedcybersecuritytothetopofourrisktable.Morethanhalfrespondents(53%)nameditamongthemainriskstotheirsuccessoverthenext

threetofiveyears(63%inNorthAmerica).

Manufacturersareanattractivetarget

Around25%ofcybersecurityincidentsin2023were

againstmanufacturingcompanies,upfromjust8%in2019,withalmosthalfofthesebeingmalwareattacks.2Theindustryhasbecomeamoreattractivetarget

becauseofitsgrowingrelianceontechnology,

valuabledataandthecriticalnatureofitsoperations.Theindustry’slowtoleranceofproductiondowntime,alsoincreasesthelikelihoodofcriminalsbeingpaidaransom,whileriskofattackbystateactorsandactivistgroupsisgrowing.

2

/technology-and-iiot/cybersecurity/article/55043740/manufacturing-is-1-in-cyber-attacks-for-third-straight-year-what-can-be-done

Reputationisagrowingconcern

Thepotentialforreputationdamagefeaturedhighlyinoursurvey,rankedby49%asatoprisk.Manufacturersareincreasinglyexposedtoscrutinyovertheir

performanceonenvironmental,socialandgovernance(ESG)issues,fromplasticwastetouseofresources

suchwaterandtreatmentofworkersinthesupplychain(seetheESGandclimatesectiononpage17).

Fearsarealsorisingoverthepotentialformisinformation

beingspreadonlineasshareholderandpublic

sentimentbecomesmoresensitivetostoriesthatgainnegativetraction.

Disruptionrisksareincreasing

Withcyberrisks,geopoliticalinstabilityandextreme

weatherincreasingaroundtheworldfirmsare

concernedaboutthethreatofsupplychaindisruptionandbusinessinterruption,whichfeaturedjointthirdinourrisktableon44%.

Asclimate-relatedeventsriseinfrequencyandseverity,manufacturersarelookingattheirexposurestoperils

suchasstorms,floodandfire,reviewingwheretheir

criticalsuppliersarelocatedandboostingtheirown

defenses.Economicinstability,namedby41%asatop

risk,islikelytointensifypressureonsupplychains,

especiallyiftradetensionsescalatebetweentheworld’smajoreconomiczones.

0%10%20%30%40%50%60%70%80%90%100%

Cybersecuritythreats

53

63

51

43

54

Reputationalrisk

49

48

53

46

49

Businessinterruption

44

45

41

44

45

Supplychaindisruption

44

42

41

50

42

Economicinstability

41

46

39

42

38

Climateandenvironmentalrisks

38

33

36

49

33

Increasingregulation

38

32

45

34

39

Cloudissuesleadcybersecurityconcerns

Drillingdownintocyberriskfactors,cloudsecurityfeaturedasamajorconcern,namedby65%.

Manufacturersareincreasinglyusingcloud-based

technologiestoincreaseefficiencyandscalabilityandgainreal-timeoperationalinsights.ButthiscancomewithincreasedrisksasfirmscedecontroloftheirIT

infrastructureandbecomemoredependentontheircloudproviders.Asoperationaltechnologybecomesmoresophisticated,thisisalsoraisinganxietiesabouttheexpandingITfootprintandaresultingincreaseinpotentialvulnerabilities—namedby64%asatop

cyberrisk.

US$46billion

Thecostofransomwareattacks

toglobalmanufacturingindowntimebetween2018–2023,notincludingthecostofransompaid.3

Weakcybersecuritysystemsandcontrols

50

50

51

50

49

Employeeerror/phishingattacks

45

43

46

46

43

Vulnerabilitiesordefectsinsoftwareorcomponents

44

43

44

41

46

State-sponsoredcyberattacks

41

37

43

42

40

Industrialespionage/IPtheft

30

32

28

33

26

3

/2023/08/03/ransomware-on-manufacturing-industry-caused-46bn-in-losses/

Cybercomment

Robustmeasuresareneededtocounterrisingthreats

Advancesintechnology,includingindustrialinternetofthings(IIoT),cloudconnectivityandartificialintelligence(AI),areenhancingmanufacturingefficiencyand

productivity.Buttheyalsoexpandthesurfacearea

fordisruptivecyber-attacks,whichcanleadto

prolongeddowntimes,affectingnotonlyproductionbutalsosupplychainoperations.

“Increasingrelianceonkeysoftwarevendorsmay

alsoincreasevulnerabilitiestobothcyber-attack

andsystemerrors,asseenduringthe2024global

ITdisruptionattributedtoCrowdStrike,”saysGlyn

Thoms,GlobalCyberStrategicDevelopmentLeader.

“Likewise,supplierswithpoorsecuritycouldexposemanufacturerstocyberthreatsassystemsbecomemoreinterconnected.”

Theimpactcanbefarreaching,leadingtobusiness

interruption,financiallossesandreputationaldamage.

Inthe2024WTWGlobalCyberClaims,themanufacturingsectorwastopintermsofransomwarenotificationswithbusinessinterruptionaccountingforaround50%ofthe

costsfollowingaransomwareattack.

Companiesrelyingongeneralinsurancepoliciesmayfindthemselvesexposed.Forexample,thecost

ofacyber-attackcaneasilyexceedthelimitsof

traditionalinsurance.Sometypesofincident,suchasstate-sponsoredattacksorsocialengineeringfraud,maybeexcluded.Generalpoliciesmayalsofailto

addresscyberrisksinthesupplychainorprovide

enoughcoverforactualbusinessinterruptionlosses.

Stepstomitigateyourcyberrisks

?Implementrobustcybersecurity:Assessyourrisksregularly,updateyourcontrolstoaddressemergingthreats,andmakesureyoursuppliershavegood

cybersecuritymeasures.

?Getboardlevelbuyin:Encouragetop-levelexecutivestoactivelyparticipateincyberriskoversighttoensurealignmentwithbroadercomplianceobjectives.

?Investincybersecurity:Allocateenoughbudgettoadaptandincreaseyourcybersecuritydefensestomeetthegrowingrisks.

?Strengthenyourincidentresponse:Regularlyreview,testandenhanceincidentresponseplanstoincrease

yourconfidenceinhandlingcyberincidentseffectively.

?Educateandtrainyouremployees:Alargeproportionofcyber-attacksareenabledbyemployeeerror.

Makesureeveryoneistrainedinhowtorecognizeandrespondtothelatestcyberthreatsandtrends.

?Considerstandalonecyberinsurance:Acyberpolicycanprovidelargelimitstoprotectagainstawide

rangeofcyberthreats,includingrisksassociatedwithsuppliersandvendorsandstate-sponsoredattacks.

Itcanalsoofferbetterbusinessinterruptioncover

thangeneralinsurance,aswellasprovidingresourcesforincidentresponseandrecovery.

“Organizationsshouldconsidertheirthirdpartyvendorvulnerabilitiescarefully,”saysBrianPaul,SeniorDirector,GlobalRiskandAnalytics.“Supplychaincyberrisk

exploitsvulnerabilitiesinthird-partyvendorstogain

accesstolarger,moresecureorganizations,theimpactofwhichcanbecatastrophic.Youmayfeelthatathird

partyyouareworkingwithhasgoodenoughcybersecuritybutthatdoesn’tmeanthethirdpartiesintheirchainarenecessarilygoodenough.”

“It’simportanttoproactivelymeasurethefinancial

costsassociatedwithcyberrisks.Thecostsofa

cyberincidentcanvarywidelyevenbetweentwo

organizationsinthesameindustryduetodifferences

inbusinessoperatingmodel,ITsupplychainandcyberresiliency.Accuratelymeasuringthecostsinfinancialtermscanenableyoutoengageseniormanagement

proactivelyandallocatetherightresourcestoeffectivelymanagerisk.”

Propertycomment

Manufacturersaremoreexposedto

climate-relatedrisk

Withthechangingclimate,extremeweatherrisksare

increasingaroundtheworld.Eventsarehappeninginareaspreviouslyconsideredlowrisk—forexampletheOctober2024floodsintheValenciaregionofSpainfarexceededthelikelymodeledriskforthatarea.

Thiscancreatecriticalissuesformanufacturers,bothindamagetoproperty,productiondowntimeandsupplychaindelaysanddisruption.“Companiescanquickly

findthemselvesunabletoproduceintheabsenceofacriticalcomponentfromadisaster-hitarea,whichmayoccurinaplacenooneexpected,”saysEdDay,HeadofNorthAmericaandInternationalProperty.

Manufacturersshouldreassesstheriskstheyfaceineachlocationandtakemeasurestominimizethem.

Forexample,toincreaseresiliencetoflood,makesure

electricalequipmentisliftedoffthegroundsoitismorelikelytocontinueworking,andhaveback-uppumps

readytodrainthewaterquickly.

Otherclimate-relatedchanges,suchassustainedhighertemperatures,mayalsoposearisktomanufacturing

acrossmanylocations.Withouteffectivecontrols,

increasedtemperaturesmayimpactthewellbeingof

theworkforce,leadingtoincreasedincidentsofinjury

anddistresswhichcouldimpactacompany’sproductionaswellasitsreputation.

“Reviewyourbusinessinterruptionandcontingent

businessinterruptioncoverandmakesureitincludes

goodprovisionforincreasedcostofworking—theextramoneyyouhavetospendtokeepworkingasnormal

afteradisasterhappens,”saysEd.“Alsomakesurethatyourpropertyvaluationsareuptodatetakingaccountofrecentinflation,sothatyoudon’tfindyourbusinessisunderinsuredandfaceunwelcomesurpriseswhen

youmakeaclaim.”

Casualtycomment

Firmsshouldfocusonconstantrisks,notjustemergingones

Oursurveysuggestmanufacturersmaybepreoccupiedwithemergingrisks,suchascyberandtradewars,andlessconcernedaboutperennialrisks,suchashealth

andsafetyandproductrecall.Theseaccountforalargeproportionofliabilityclaimsagainstmanufacturers

butfeaturedwelldownthelistofbiggestriskstobusinesssuccess.

“It’sparticularlysurprisingthatproductrecallwasrankedbyonly23%asatoprisk,consideringthefrequencyandseverityofrecallriskshavebeenontheriseoverthepast18months,”saysHeadofProductRecall,LouiseDorrian.

“Itmaybethatcompaniesfeeltheyhavethisunder

control,ordon’tfeeltheyareatriskuntilanincident

happens.However,ifitdoes,theimpactcanbesevere,includingnotjustthecostofrecallingtheproductbutalsoanalysisandcleanupexpenses,legalclaimsand

reputationaldamage.”

Pollutionliabilityisanotherconstantriskfor

manufacturersandwasamongthetopfive

environmentalrisksinoursurvey.Asregulations

tightenaroundwastemanagement,there’sgrowing

awarenessofhiddenriskssuchashistorictoxicwastewhichhasbeenburiedonsite.

“Tominimizetheirpotentialliabilities,manufacturersshouldcontinuetoinvestinproductandemployeesafetyandworktocreateauniformcultureofrisk

managementacrossalloftheirmanufacturingsites,”

saysRaoulStaff,HeadofInternationalCasualty.

“Talktoyourbrokeraboutemergingrisksasthey

willhavesightofallnewclaimscomingintothe

marketandcanadviseonablendofriskmitigation,

riskretentionandrisktransferbasedonyourindividualdatawhilstcombiningcurrentexperience.”

Supplychainandgeopolitics

Trendtowardsdeglobalizationisacceleratinginunstabletimes

Asweenter2025,ourresultssuggest

manufacturersareincreasinglynervousabouttheimpactofglobaleventson

theirabilitytodobusiness.

Morethanthree-quartersofrespondents(76%)placedtradedisputesandprotectionismamongtheirtop

geopoliticalconcerns(84%inLatinAmerica),

while72%saiderosionofinternationallawsandagreementsandeconomicsanctionsandexportcontrols,and69%confiscationorcurrency

inconvertibilityrisk.

0%10%20%30%40%50%60%70%80%90%100%

Tradedisputesandprotectionism

76

79

66

75

84

Erosionofinternationallaws,regulationandagreements

72

76

69

73

70

Economicsanctionsandexportcontrols

72

66

70

74

76

Confiscationriskandcurrencyinconvertibility

69

75

68

65

68

Politicalinstabilityandcivilunrest

65

62

66

67

66

Electionresultsaroundtheworldhavestrengthenedthehandoftradenationalists,intensifyingthedeglobalizingtrendthat’sbeenunderwayduetogeopoliticaltensionsandthepandemicsupplychaincrisis,makingfurther

economicdecouplinglikely.

Manufacturersfacetheprospectoftariffsonimports

offinishedproductsandcomponents,whilewarsandpoliticalinstabilityhaveincreasedthepotentialfor

embargoesandsanctions,aswellasgrayzoneconflict,inwhichtradeisweaponizedbycountriesforpoliticalends.AnyescalationoftensionsaroundTaiwancould

threatenasemiconductorcrisis,withglobalripple

effectsspreadingacrossindustriessuchasautomotiveandelectronics.

Terrorismandsecuritythreats

56

55

62

53

55

TheconflictinUkraine

32

37

41

20

30

ConflictsintheMiddleEast

32

32

38

30

26

TensionsbetweenChinaandtheWest

27

18

20

43

25

Creditandpoliticalriskscomment

Manufacturersareconcerned

abouttheimpactofglobalevents

“Manufacturersareincreasinglyanxiousaboutthe

impactofglobaleventsontheirbusinessoperations.

Thisanxietyisreflectedintheirconcernsabouttrade

disputes,protectionism,andtheerosionofinternationallawsandagreements”,saysCynthiaDugan,Director,

FinancialSolutions.Thesefactorscansignificantlyaffectcreditrisk,astheymayleadtoincreasedcosts,reducedprofitability,andpotentialpaymentdefaults.Economicsanctionsandexportcontrolscanfurtherexacerbate

creditriskbylimitingmarketaccessanddisrupting

supplychains.Theprospectoftariffsonimportsof

finishedproductsandcomponentsaddsanotherlayeroffinancialstrain,potentiallyleadingtohighercosts

andreducedmargins.Creditriskinsuranceprotects

manufacturersagainsttheriskofnon-paymentbytheircustomers.Thisisparticularlyimportantintimesof

economicuncertaintyandgeopoliticalinstability,

wheretheriskofdefaultsmayincrease.Bysecuring

creditriskinsurance,manufacturerscansafeguardtheircashflowandensurethattheyreceivepaymentfor

theirgoodsandservices,eveniftheircustomersfacefinancialdifficulties.

Thegeopoliticaltensionsthatareshapingtheglobal

businessenvironmentareintensifyingthetrendtowardsdeglobalizationandeconomicdecoupling.Thisshift

canleadtoincreasedprotectionism,tradebarriers,andgeopoliticalconflicts,allofwhichposesignificantriskstomanufacturers.Warsandpoliticalinstabilityhave

heightenedthepotentialforembargoesandsanctions,aswellasgrayzoneconflictswheretradeisweaponizedforpoliticalendswithwidespreadrippleeffects

acrossindustriessuchasautomotiveandelectronics.

Manufacturersmustnavigatethesepoliticalrisks

carefullytomitigatetheirimpactonbusinessoperationsandmaintainresilienceinthefaceofuncertainty.

Politicalriskinsuranceprovidescoverageagainstarangeofadversepoliticaleventsthatcanimpactbusiness

operations.Thisincludesprotectionagainstconfiscation,expropriation,nationalization,andpoliticalviolence.

Formanufacturers,thismeansthatifagovernment

changesanddecidestoconfiscateassetsorcancel

licenses,theinsurancecancoverthefinanciallossesincurred.Thistypeofinsuranceisparticularlyrelevantinregionswheregeopoliticaltensionsarehigh.

Just-in-timeoperatingmodels

41

35

43

46

38

Suppliersolvencyandliquidityissues

40

35

42

44

37

Dependenceonasinglesupplier/location

40

42

40

30

46

Componentandrawmaterialshortages

37

31

43

36

39

Energysupply/serviceinterruptions

36

43

34

35

32

Supplychainsvulnerabletocyberrisk

Theprospectofmaliciouscyberactivitytargetingsupplychainsalsoloomslarge,withalmosttwo-thirds(60%)

rankingcyberamongtheirbiggestsupplychainrisks.

Theinterconnectednessofsuppliersystemsmeansthataweaklinkinthechaincouldnotonlycausepotentialdisruptionbutalsoactasanentrypointtoinfect

manufacturersystems.

Morethanhalf(53%)ofmanufacturersareconcerned

abouttheimpactofnaturaldisastersonsupplychains

(60%inLatinAmerica).Eventssuchasstorms,floodsandwildfireshavebecomemorefrequentandsevere,while

supplychainsaremorecomplex,addingvulnerabilities.

“Asclimatechangeaccelerates,itislikelytohavea

moreprofoundeffectonhowandwhererawmaterialsaresourced,”saysGlobalHeadofCoreAnalytics,Ben

Fidlow.“Assupplychainsbecomemorecomplex,thereisagreaterinterdependenceacrossthenetwork—

spanningsuppliers,manufacturers,distributors,and

retailers.Thismakesitevenmorecriticaltomeasure

andmonitorkeyriskssuchascivilunrest,terrorism,andmajornaturalcatastrophes,withtimelyandup-to-dateinsights.Predictivemodelingcanhelpmanufacturers

effectivelytrackandmanagethesesupplychainrisks.”

Interestingly,firmsseemlessconcernedaboutjust-in-timeasasupplychainrisk(41%),perhapsindicatingtheworkmanymanufacturersareal