BSI's Global Supply Chain Intelligence report reveals top supply chain risks in 2016

Cargo Theft in the Americas hits a new high, while continued risks of terrorism threaten Europe and a rise in continuity concerns surfaces in Asia

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BSI

May 22, 2017, 10:02 ET

SCOTTSDALE, Ariz., May 22, 2017 /PRNewswire/ -- In 2016 global supply chains continued to face a range of security, social responsibility, and business continuity risks, with many of these issues provoked by one another. BSI noted multiple incidents that started out as a security, social responsibility, or a business continuity risk that cascaded into other supply chain issues. The European migrant crisis is perhaps the best example of a type of event that began as a single security risk, before building into a business continuity disruption as countries imposed border controls, which in turn was exacerbated by blocked migrants looking for work, often falling victim to forced labor in certain nations. As risks, such as the migrant crisis, continue to evolve, it's imperative that organizations work together to take a holistic risk management approach to ensure they are informed and prepared to address multiple areas of concern.

BSI's Global Supply Chain Intelligence Report provides an overview of the top supply chain threats and trends by region to help organizations increase their visibility and understanding of potential exposures within the supply chain. A sample of the highlights by region are identified below:

Asia
In 2016, governments in Asia responded to increasing levels of supply chain risks, but many policies were merely reactive and often led to further threats to the integrity or continuity of the supply chain. BSI observed a shift in labor strike threats in China in 2016, driven mainly by concerted government efforts to limit strikes in the country following years of increasing labor disruption. Labor strikes still occurred in large numbers across China last year, but the number of strikes dropped in 2016 for the first time in recent years. Strikes at factories dropped by 31 percent; with two-thirds of provinces – including major apparel, consumer goods, and electronics production hubs – witnessing a decline in manufacturing strikes. An emerging area of concern is the growth in strikes in the logistics sector, including trucking, shipment processing, and delivery, which rose more than fourfold from nine incidents in 2014 to 40 last year.

Asia also saw an increase in labor rights concerns in Bangladesh in both the readymade garments (RMG) sector and in other industries. A December 2016 survey of the Dhaka slums found a far higher incidence of child labor than previous government studies had suggested, with 15 percent of children employed in formal and informal enterprises. Additionally, the survey found that a significantly larger proportion of children were employed in the formal RMG sector than had been previously believed. The study also documented abusive practices in garment factories that employed children. Over 37 percent of girls reported being forced to work overtime, while children employed in the formal garment sector earned only half the national minimum monthly wage for garment workers.

Europe
Europe experienced significant terrorist attacks in Nice, France in July and Berlin, Germany in December, along with dozens of counterterrorism arrests across Europe in 2016. Those attacks in particular also underscored the threat that terrorists will exploit the supply chain to perpetrate attacks. In both cases, Tunisian men linked to the Islamic State in Iraq and Syria (ISIS) used cargo trucks to ram into crowds of civilians. The Berlin attacker even perpetrated an explicit disruption of the supply chain before the attack by hijacking a Polish tractor-trailer carrying a shipment of steel beams. ISIS-linked plots involving similar timing and tactics are likely to continue challenging European security into 2017.

In Turkey, a faction within the military launched a failed coup against the reigning Justice and Development Party (AKP) government on July 15, 2016, leading to significant security and business continuity impacts in the short and long terms. The Turkish government's response to the coup attempt has exacerbated security and business continuity threats in the country. Days after the coup, the government began widespread purges of numerous government departments and agencies across virtually every ministry, as well as the military, police, and intelligence services. There have been 100,000+ officials removed from public duty, 70,000 investigated and 32,000 arrested in total.

Americas
Supply chains in the Americas faced a wide range of risks related to security, corporate social responsibility, and business continuity in 2016. Cargo theft remains a main concern for the Americas with the most dramatic increase in cargo theft rates in Rio de Janeiro last year. Already the second largest hotspot for cargo theft in the country, officials in Rio de Janeiro reported a total of 9,870 cargo theft incidents in 2016, 36 percent more incidents than those recorded in the state in 2015. The year-over-year increase in cargo theft incidents in both Rio de Janeiro and Sao Paulo, combined with minimal efforts to curb the rate of theft, suggests that Brazil could see another year of increased cargo theft in 2017.

BSI also recorded varying degrees of improvement in corporate social responsibility protections in Latin America in 2016. The BSI SCREEN Intelligence Team reduced the rating for the threat of child labor in both Ecuador and Panama due to each country's sustained efforts to drastically eliminate the problem. In Ecuador, the government reduced the rate of children working in the country from the 16 percent recorded in 2007 to now less than three percent, with Panama succeeding in reducing the rate of child labor in the country to about four percent, a number that represents a 50 percent reduction since 2012. Although most countries in Latin America improved upon their corporate social responsibility record, some nations, particularly Peru, failed to make much headway last year.

In 2017, BSI expects continued threats of cargo theft and drug smuggling in the Americas and Europe, protests over wage and other labor issues across Asia, and persistent risks of terrorism, including terrorist targeting of the supply chain. New initiatives to address security, social responsibility, and continuity risks in many regions will require close monitoring to assess their effectiveness at the ground-level.

To download a copy of BSI's 2016 Global Supply Chain Intelligence Report, please click here.

The data and analysis within this report is pulled directly from our global supply chain intelligence platform, SCREEN. SCREEN provides insight into global supply chain security, business continuity and corporate social responsibility threats and trends in real-time. SCREEN allows users to visualize risk on a global scale and easily identification high-risk locations and potential exposures. Our spotlight news feature and proprietary global risk maps help organizations stay up to date with emerging threats and better protect their supply chain, brand and reputation. For more information about our data and intelligence platform, please contact us directly [email protected].

Notes to Editors:

For a full copy of the report, please contact the press office.

About BSI
BSI (British Standards Institution) is the business standards company that equips businesses with the necessary solutions to turn standards of best practice into habits of excellence. Formed in 1901, BSI was the world's first National Standards Body and a founding member of the International Organization for Standardization (ISO). Over a century later it continues to facilitate business improvement and organizational resilience across the globe by helping its clients drive performance, manage risk and grow sustainably through the adoption of international management systems standards, many of which BSI originated. Renowned for its marks of excellence including the consumer recognized BSI Kitemark^™, BSI's influence spans multiple sectors with a particular focus on Aerospace, Automotive, Built Environment, Food, Healthcare and IT. With 81,000 clients in 181 countries, BSI is an organization whose products and services inspire excellence across the globe.

To learn more, please visit www.bsigroup.com

About BSI Supply Chain Services and Solutions
BSI Supply Chain Services and Solutions is the leading global provider of supply chain intelligence, auditing services, audit compliance and risk management software solutions, and advisory services. Our mission is to help corporations, governments and associations identify, manage and mitigate global supply chain risks and maintain world class governance risk and compliance programs. Our holistic supply chain risk management suite is designed to predict and visualize risk, and develop robust risk mitigation and compliance management programs to protect your supply chain, brand and reputation. Our intelligence-infused supply chain solutions and global network empower our clients to understand global supply chain risk with unequaled precision.

To learn more, please visit www.bsi-supplychain.com

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SOURCE BSI