Supply chain disruptions – the three words no business owner wants to hear! Unfortunately, disruptions outside of our control can have huge consequences for businesses resulting in financial losses, dissatisfied customers, and business interruptions.
So, what can you do to protect yourself from supply chain issues?
What Causes Supply Chain Disruptions?
Supply Chain disruptions cause delays, additional costs, and ultimately damaged relationships with customers. But what causes the disruptions to begin with?
- Global Pandemics: Covid-19 caused unprecedented supply chain disruptions with the shutting down of factories, shipping delays and material shortages all around the world.
- Geopolitical Instability: Events like Brexit can cause regulatory changes, tariffs and customs delays.
- Natural Disasters: Adverse weather conditions can disrupt transportation and damage goods in transit.
- Transportation Issues: Driver shortages, postal strikes and port delays can create logistical bottlenecks.
- Supplier Insolvencies: Key suppliers going bankrupt can result in unfulfilled orders and financial strain on the business.
All these factors are beyond your control, leaving you to pick up the pieces and handle the damage to your bottom line. That’s why it’s important to have the right insurance to protect your business in the event of supply chain disruptions.
What insurance do I need to protect against supply chain risks?
We recommend doing some research and finding the right insurance policy for your business. Cost can be a factor, but so should proper coverage. Here are some options to consider.
Some tailored insurance options to consider are:
- Business Interruption Insurance: This insurance offers coverage that protects lost income when operations come to a stop due to supply chain issues. It can cover fixed costs and lost wages.
- Trade Credit Insurance: This insurance protects against non-payment from suppliers or customers and can ensure financial stability when suppliers are no longer able to trade.
- Marine Cargo Insurance: Insures goods in transit against loss, damage or delays and covers shipments from sea, air or land.
- Product Recall Insurance: This insurance can protect your business against a retailer recalling defective products and can cover costs for recalling faulty or unsafe products. This type of insurance also usually covers legal fees, logistics and customer notifications.
- Supplier Failure Insurance: This insurance can assist with compensating for losses when a supplier fails to deliver goods.
- Contingent business interruption insurance: Offers protection against lost revenue caused by disruptions at third-party suppliers.
Finding the right insurance means you can minimise the risk of financial loss caused by supply chain uncertainties.
Benefits of Insuring Against Supply Chain Disruptions
Investing in supply chain insurance offers several benefits including,
- Financial Stability: Mitigate the financial impact of unexpected disruptions
- Operational Continuity: Keep your business running during challenging periods
- Customer Loyalty: Minimise delays and maintain service levels, to preserve your customer relationships
Enhancing your supply chain resilience
As always, the best form of protection is prevention. We highly recommend conducting a risk assessment so you can strengthen areas of your business that are most vulnerable to supply chain disruptions.
The Bateman Group is here to help you find the right insurance solutions for your business, Get in touch with our expert team of insurance advisors today and protect your business against supply chain disruptions.
