Materials and risk strategies
According to American Aon Risk Solutions Global Risk Management Survey 2012 provides three large risks faced by companies in the global industrial and materials industry: economic turmoil, commodity pricing fluctuations and business interruptions, including supply chain disruption
Demand becomes difficult to forecast because of a slow recovery in the USA, prolonged economic stability issues in the EU and a slowing Chinese market. Since raw materials and energy add significant contribution to the cost of goods sold, concerns on commodity price volatility are high because in turn it affects cost structure, budget, inventory and production. The growing complexity of global supply chains and rapid developments in technology are other risk issues for the managements of companies and is enlarged by the trend to outsource component parts, also offshore production becomes more of concern. The full report can be had from the first website mentioned below.
Aon considers the natural disaster in Japan and Thailand accompanied widespread supply chain and business interruption failures for the automotive and other industrial manufacturing sectors as a wake-up call for all organisations to more carefully evaluate the correlation of their global operations and to develop a corporate approach to manage risks and to optimise the global strategy.