SCDigest Editorial Staff
For 16 years, insurance and risk management company Aon has partnered with researchers at the UK’s Oxford Analytica to produce a view of worldwide risk at a country-by-country level, including political risk, economic and, more recently, supply chain risk.
Risk management has been high on the corporate supply chain agenda for many years, as risk potential dramatically impacts how many companies think about both supply and demand elements of their value chains – now more than ever.
Actually, given the worldwide recession, in this year’s map, Aon actually removed the icon signaling economic risk from each country where it would normally be indicated because there would have been so many countries having high levels of economic risk that the assignment would have become meaningless. (The map can be downloaded here: Aon 2009 Risk Map.)
However, perhaps the major theme of the 2009 map is that those economic troubles are turning into political problems in dozens of countries.
“Economic risk underlies much of the political risk we are seeing,” said, Miles Johnstone, a Director in AON’s Crisis Management group. Political crises can have a devastating effect on supply or demand chains in the affected countries.
Worse still, political risks are especially volatile in nature, Johnstone notes. While the risk map provides a view at a fixed point in time, political turmoil that may impact a company’s supply chain operations can arise very rapidly, especially in these times. That means companies must be especially aggressive in developing intelligence about political developments in various countries and regions, and craft aggressive mitigation plans for worrisome areas.
In fact, Aon this year for the first time colored some countries in red, representing “very high” overall risk, versus a broader “high risk” designation in previous years. It says it is impossible to get various forms of trade insurance in some these very high-risk countries, but possible in a few of them even under these conditions.
(Global Supply Chain and Logistics Article - Continued Below)