When last year’s tsunami damaged a microchip producer north of Tokyo, car manufacturers over 10,000 kilometres away in Detroit had little idea it would mean lay-offs for them as they lost access to vital supplies. Neither did politicians in Germany realize that the subsequent crisis at the Fukushima nuclear plant would result in a reversal of their national energy policy, with public sentiment turning against nuclear power.

Supply chains and transport networks are the backbone of the global economy; yet, they are extremely vulnerable to shocks. And when affected, the impact is felt far down the line, in ways that are increasingly hard to anticipate.

A new report to be released at the World Economic Forum Annual Meeting in Davos probes the weak links in supply chains, which are ever more interconnected across countries and industries. Produced in collaboration with Accenture, New Models for Addressing Supply Chain and Transport Risks highlights the urgent need to review risk management practices to keep pace with rapid changes in the supply chain, transport, aviation and travel sectors.

Ensuring the safe and secure flow of people, goods and trade has become a priority for leaders worldwide, and makes this report more relevant than ever before.

What action needs to be taken?

CEOs and government figures convening at the Annual Meeting in Davos will discuss the recommendations that the report makes on how they can enhance both their understanding and management of risk.

The report analyses the most likely events to disrupt supply chains and identifies the “risks to watch” which are increasingly important in a world where volatility is the norm. The factors exacerbating risks within supply chain structures, practices and strategies are also analysed. An understanding of these risks, and the associated costs, is imperative in order to mitigate them effectively. To conclude, the report identifies five best practices which need to be implemented jointly by the public and private sector to increase the resilience of supply chains.

The full report will be published on 25 January, but in the meantime, visit our webpage: http://www.weforum.org/supplychain

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