When business came to a standstill

A year ago, Japan was hit by a triple disaster – an earthquake, a tsunami and a nuclear crisis leaving many areas devastated. But the effects were also felt around the world. Production stoppages at Japanese suppliers and destroyed logistics infrastructure caused interruptions in global supply chains that were felt around the world.

"More than half of our insurance losses from the Japan disaster were the result of business and supply chain interruptions. That's a new dimension," says Andreas Shell, Global Head of Property Claims at Allianz Global Corporate & Specialty (AGCS).

The disasters in Japan and, even more so, the extensive flooding in Thailand late in 2011 showed companies and insurers just how vulnerable global supply chains are. The electronics and automotive industries, in particular, were faced with bottlenecks or even production outages around the world as suppliers were unable to deliver as planned.

"More than half of our insurance losses from the Japan disaster were the result of business and supply chain interruptions." Andreas Shell, AGCS

A recent Allianz survey revealed that many companies view disruptions in the supply chain and business interruptions as a major business risk. Many are undertaking systematic efforts to make their supply chain risks more transparent and limit their risks.

Companies are taking an increasingly professional approach to addressing specific risks. However, companies should not merely professionalize their own risk management, but also engage their suppliers in this process: "Even the suppliers' suppliers must be involved," stresses AGCS risk consultant Ralf Dumke.

Going beyond proprietary risk management systems, many companies are also preparing for business interruptions by taking the necessary insurance cover. "We continue to provide sufficient cover for business and supply chain interruptions. But we expect companies to allow us insight into their risk management approach and also into their supplier structures, particularly when loss exposures are high," explains Volker Muench, Head of Corporate Underwriting Property at AGCS.

 
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Hugo Kidston

Allianz Global Corporate & Specialty
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Jonathan Tilburn

Allianz Global Corporate & Specialty UK
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Jacqueline Maher

Allianz Global Corporate & Specialty North America
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