Supply chains swapped pandemic impacts for new risks in 2023

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Corporate supply chains swapped one set of challenges for another in 2023, as pandemic impacts moved into the rearview mirror, only to be replaced by a range of other risks like inflation and rising interest rates, natural hazard events, and ESG-related risks such as human rights violations and labor practices, a report says.

The analysis comes from a “Supply Chain Risk Report” produced by Sphera, a Chicago-based provider of environmental, social and governance (ESG) performance and risk management software, data, and consulting services.

The report is based on data from Sphera’s Supply Chain Risk Management (SCRM) software, which uses artificial intelligence (AI) to scan on a monthly basis more than 15 billion reputable news articles, commercial and government data sources, and 1 million customer and supplier sites around the world. 

The report identified challenges in finance, weather, and corporate governance:

  • more than one-third (36%) of the financial risk notifications warned of worsening revenue and growth outlook, tied to high inflation rates in the EU and U.S. that eroded suppliers’ purchasing power, with insolvency under self-administration going up 23% and bankruptcies increasing 42%.
  • natural hazard events hit supply chains hard in 2023 with warnings for tornadoes climbing by 45%, hailstorm warnings increasing by 26%, and tropical cyclone warnings going up by 6%. Those events particularly affected industries such as agriculture, energy, and transportation
  • ESG-related risks in supply chains continued to rise in 2023, with indicator messages for the category rising 6% in volume as human rights notifications increased 12%, labor practice issues rose 13%, and ESG-related issues related to violations of environmental practices went up 1%.

“Risk exposure is dynamic, and constantly evolving supply chain risks cause ever-increasing market volatility,” Paul Marushka, Sphera’s CEO and president, said in a release. “By optimizing the supply chain composition and diversifying suppliers, companies can better manage the uncertainty that comes with supply chain disruptions. To do this, organizations need a solution that provides actionable insights for proactive risk monitoring that enables them to get ahead of disruptive events.”

 

 

 



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