Sphera's Supply Chain Risk Report Shows Economic Uncertainties, Extreme Weather and ESG-related Risks Among Supply Chain Disrupters in 2023 -- And Pandemic-Related Impacts Nearly Vanishing
CHICAGO, March 5, 2024 /PRNewswire/ -- While supply chain impacts from the COVID-19 pandemic moved into the rearview mirror in 2023, data in Sphera's inaugural Supply Chain Risk Report shows that supply chains were vulnerable to a broad range of other risks — inflation and rising interest rates, natural hazard events and ESG-related risks such as human rights violations and labor practices among them.
Sphera's inaugural report demonstrates the data-based insights that help empower companies to protect their businesses from ever-evolving risks and build resilient, agile and sustainable supply chains
CHICAGO, March 5, 2024 /PRNewswire/ -- While supply chain impacts from the COVID-19 pandemic moved into the rearview mirror in 2023, data in Sphera's inaugural Supply Chain Risk Report shows that supply chains were vulnerable to a broad range of other risks — inflation and rising interest rates, natural hazard events and ESG-related risks such as human rights violations and labor practices among them.
With its new report, Sphera, a leading global provider of ESG performance and risk management software, data and consulting services, aims to provide insights into the risks that impacted supply chains in 2023 — as well as their causes and consequences. The report is based on data from Sphera's Supply Chain Risk Management (SCRM) software, which provides actionable insights into a multitude of potential disrupters so companies can proactively manage and mitigate supply chain risk.
"Sphera's Supply Chain Risk Report shows that a broad range of risks, increasing ESG regulations and compliance failures can stress businesses," said Paul Marushka, Sphera's CEO and president. "Risk exposure is dynamic, and constantly evolving supply chain risks cause ever-increasing market volatility. 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. Staying ahead of supply chain risk helps businesses reduce potential costs associated with such risk, gain competitive advantage and build transparent, agile supply chains."
Financial-related challenges stress the supply chain
Data in the report shows that more than one-third (36%) of the financial risk notifications warned of worsening revenue and growth outlook. High inflation rates in the EU and U.S. eroded suppliers' purchasing power, with insolvency under self-administration going up 23% and bankruptcies increasing 42%. Additionally, site relocations or closures increased by 26%. Financial distress does not happen overnight, and awareness of finance-related risks is strategically important to helping companies withstand economic fluctuations and uncertainties and build resilience.
Extreme weather events are on the rise
The report shows that 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%. Two-thirds of the global economy is affected directly or indirectly by weather conditions with industries such as agriculture, energy and transportation particularly affected. A solution that provides 24/7 monitoring and advanced notifications of weather risks can help companies prepare their supply chains and get ahead of an impending disruption — and help minimize the financial impact on the business.
ESG-related risks remain prominent
Data also shows that ESG-related risks in supply chains continued to rise in 2023, with indicator messages for the entire category of ESG-related risks rising 6% in volume. Human rights notifications increased 12%, labor practice issues rose 13% and ESG-related issues related to violations of environmental practices went up 1%. Increased globalization, regulatory changes and consumer and investor demands can all contribute to the greater prominence of ESG risk in supply chains. A holistic approach to supply chain risk management that integrates ESG considerations into the strategy can help companies mitigate the consequences of ESG-related risk.
Report Methodology
Sphera's award-winning Supply Chain Risk Management (SCRM) software was the data source for this report. The AI-powered Risk Intelligence component of Sphera SCRM scans 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. These feeds provide Sphera with the most highly representative supply chain risk insights on the market and allow Sphera's technology to identify potential risks or worsening trends and notify customers of such threats. For the report, Sphera compared the number and types of indicator messages sent from January through November 2023 with the datapoints from the same period in 2022.
About Sphera
Sphera is the leading provider of environmental, social and governance (ESG) performance and risk management software, data and consulting services focusing on Environment, Health, Safety & Sustainability (EHS&S), Operational Risk Management (ORM), Product Stewardship and Supply Chain Risk Management (SCRM). For more than 30 years, we have served over 8,400 customers and a million-plus users in 95 countries to help companies keep their people safe, their products sustainable and their operations productive. Learn more about Sphera at www.sphera.com. Follow Sphera on LinkedIn.
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