← Risk in Context Podcast
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- [00:07]
A
Welcome to Risk in Context, which features conversations with Marsh colleagues, risk professionals, and industry experts to help you better understand key challenges, develop more effective insurance programs, and think creatively about risk. I'm James Crask, global supply chain Practice leader at Marshall. Now, supply chain vulnerabilities have become systemic, driven by geopolitical conflict, trade volatility, extreme weather, surging energy prices, and digital infrastructure demands that are tightening capacity for critical inputs from fuel and freight to semiconductors and specialized equipment. And as a result, risks are cascading globally, raising costs, extending lead times, delaying projects, disrupting operations, and threatening reputations across industries. Now, a lot of the conversation around supply chain risk is understandably focused on this macro environment. However, in this episode, we're narrowing the lens to explore what those pressures mean in practice for a select few critical industries focusing on automotive, manufacturing, construction, and life sciences. Joining me are three colleagues from across Marsh who are repeatedly confronted with this question in their daily conversation with clients. So we have Jael Futzio, head of global contractor and infrastructure development, Lisa Caldwell, U.S. manufacturing and automotive industry leader, and Eddie Ulbers, U.S. life sciences practice leader. Together, we're going to unpack these complex supply chain risks and discuss practical solutions and risk transfer strategies to help organizations build resilience in an increasingly interconnected and volatile world. Really, to start with, I'd like to ask each of you to introduce yourselves for the benefit of the listeners in a bit more detail. And it'd be good to share just one or two sentences about your role and how it relates to today topic. Lisa, can I start with you?
- [02:17]
B
Sure. And thanks for having me today, James. So I am our US Manufacturing and automotive industry leader, and my role is to work with clients in addressing and building solutions for emerging risks. So I'm very excited about today's conversation because I think it gives us the opportunity to focus on what I call a new lens in manufacturing and automotive. After years of really driving maximum efficiency in our industry, we need to start to think about that efficiency for things that are stable and unlikely. But we have to start thinking about things that are more catastrophic and driving resilience to really address things that are more catastrophic. So today I think we're going to have a chance to talk about what it takes to really build that resilience. And so excited to be here.
- [03:09]
A
Thank you very much, Lisa. I think there's a lot that we can all learn from the automotive and manufacturing world with regards to supply chain. Joao, can I talk to you? Next, quick overview and an introduction from yourself.
- [03:23]
C
Sure. Also a pleasure to Be here, James. My name is Joao and I head up our global contractors and infrastructure development initiative at Marsh Construction. We have a team of about 1,000 specialists around the globe advising owners and contractors in developing projects. The reason why this topic is close to my heart and to my mind is the fact that supply chain risks is a very important risk for contractors working around the globe. And as you rightly pointed out, it is an interconnected risk. We see some of the same trends and how actually the supply chain risk on a particular continent can also have a repercussion on another continent. And it is that interconnectivity that makes people in my division a worthwhile advisor to some of our contractors around the globe.
- [04:24]
A
Thank you. That's fantastic. So from building vehicles to buildings, the let's talk about healing people. Eddie, can I ask you to introduce yourself?
- [04:34]
D
Thanks for having me, James. I am Eddie Albers. I lead the life sciences practice for Marsh in the United States. Like my colleagues, this is an incredibly important area for our clients. And when I say life sciences, I'm referring to pharmaceutical, medical device, biotechnology companies. You know, the COVID 19 pandemic really, really highlighted some areas where the industry responded well by getting those products and vaccines to patients when needed in a quick manner. It really highlighted some areas of vulnerability within the industry, dependencies in certain geographies. And so the industry's really kind of pulled back a little bit by making sure they're really focused on resiliency. But because of that, there are trends which I'll talk about later, that really make the supply chains more complex, which, you know, we need to kind of unpack and help our clients understand those risks and create strategies to mitigate those risks. The one thing I wanted to mention is the criticality of the life sciences industry, as you mentioned, James, in your intro, it's. It's could be a life or death situation. In certain instances where certain products can't get to patients, it could be catastrophic. You know, I really love this industry because it's so important to get these life saving and life enhancing drugs and devices to, to the patients.
- [06:16]
A
Eddie, thank you. Thank you for that. And you have all sort of touched on some of the main challenges with regards to supply chain risk. We're living in a really complex risk environment. It's very uncertain. We continue to see what feels like a continuous stream of disruptive events that are impacting on our supply chain. Some of them big, some of them more challenging. And what is interesting about all these experiences, big and small, is that they have highlighted I think for all of us, how fragile supply chains have become partly caused by, in my view, an overemphasis on efficiency over resilience, which is something, I think Eddie touched on, that term, resilience. Just a moment. And Eddie, I'm going to turn back to you. First off, I'd like to just hear your thoughts on what you're seeing across the pharmaceutical supply chain in particular.
- [07:16]
D
Absolutely. You know, there are a lot of things that make the supply chains for life sciences very complex. The regulatory aspect, if you think about the FDA and the European Medicines Agency, the EMA out of Europe, they really are looking at every step of the process. So whether it's the procurement of raw materials or the manufacturing or the distribution of these products, if something goes wrong, you need them to come in and really validate kind of when you, when you need to fix things. So that's a process that's fairly unique to life sciences and can take a lot of time. The other aspect that is interesting is many of these products are, are temperature controlled. So you have a cold chain, what we call cold chain dependency. So any delays or missing product or things that could happen to those, those freezing refrigeration units can really have a negative impact on the product as it's traveling, you know, ultimately to get to the, to the patient. I mentioned the, the kind of evolution of, of the supply chain over the last five years for, for the life sciences companies. You know, we've seen a huge effort to what we call onshore reshoring manufacturing. So we have about 400 billion in commitments by the pharma industry to build manufacturing facilities in the US and to really start producing more active pharmaceutical ingredients, which is the raw materials of these products here in the US So that's going to change everything over time. That doesn't happen overnight. So there's just a lot of kind of complexity and changes that are happening in the industry. The last piece, I think that's a bit unique as well is this advancement of science around cell and gene therapies. Well, you have ultimately products that are taking cells from individual patients being transported to the pharmaceutical manufacturer. Those cells are augmented and change and then shipped back to the patient for infusion. So if you think about that supply chain, that's, it's very personalized and I think this will be obviously an area of growth and we'll see more of this type of manufacturing is just changes
- [09:52]
A
the whole,
- [09:55]
D
the whole supply chain for those type of companies. So a lot to work with whether you're producing these very rare Disease cell therapy, gene therapies all the way to large kind of pharmaceuticals in the pill form.
- [10:11]
A
Thank you, Eddie. I mean you've described a highly complex, highly integrated, highly regulated system but, but ultimately the one that delivers enormous benefits. It must be an extremely exciting industry to work in. Joe, I'm going to move across to you. In some ways, I guess the risks in construction will look quite different to life sciences. Would you like to just walk us through some of the headlines in your sector?
- [10:41]
C
Of course. Firstly, important to point out that supply chain in the construction industry or supply chain exposure is a lot more than the procurements of construction materials or critical pieces of equipment. It is also the quality of subcontractors, the quality of suppliers and also dealing with a fight for talents that the construction industry has been going under for several years now. All of that plays a, a variable in, in what it is the supply chain exposure for a construction company. However, commodity prices. Absolutely it is important. We went through a inflationary cycle during 2022 that led central banks around the globe to hike interest rates. And construction projects, at least the very large ones, be financed by debt. So that's interest on that will also increase the capital expenditure full process around the globe. So you can see how commodity prices, inflation, but also interest rate policy plays an important part. And more recently, with the geopolitical uncertainty in the Middle east, some contractors do depend on petrochemical derived materials, whether that's PVC or synthetic components. And you don't need to look too far. You can look very close to where I sit in London at the Metal Exchange where the price for aluminum increased to the highest level to 2022. Another key element of this is a timeline. Construction industry always struggle to some degree to deliver projects on time. And when you have this volatility that makes that challenge even more difficult to manage. Rotors, for example, on power plants can take up to 30 months to replace. And we've seen contractors and developers often buying components based on availability. So for example, bringing in a piece of equipment well ahead of schedule just because it had become available, that creates challenges in itself because then you have an idle piece of equipment for some months on a project site. But the point here is you can see how the timelines are becoming a lot harder to manage. Adit mentioned the labor challenge. And you can see nowadays that the construction industry are having to seek technologically savvy talent to come and join the construction industry, often not necessarily competing with the likes of the Magnificent Seven for those technologically savvy members of of the talent pool, but certainly having to have an employee value proposition that enables to attract some of that talent into the industry. But all of this is underpinned by a contractual framework. A project is composed by a network of contracts and agreements, whether that's the owner with the contractor or the project manager or the architect or several subcontractors. And for several years fixed price contracts were dominant in in several global markets. What that meant was that these fluctuations and the cost of a run would be assumed mostly by the contractors, contractors that are already working under very thin margins. So as you can see, these fluctuations, these restrictions in the supply chain can easily erode on projects profitabilities.
- [14:50]
A
Thank you very much. I imagine it must be really challenging to manage some of the sort of the spikiness in supply chain risk in an environment that is quite low margin. There's not much fat in the system to absorb some of that volatility. Lisa, if I could turn to you now and ask you to share what's driving risk volatility in the world that you operate in.
- [15:15]
B
So I think for us in automotive, volatility has just become our operating environment. I think this is sort of our normal. And so handling these things as they come at us is something that we're really building our muscle memory around. I think there's three things that I would focus on and obviously I have to start with tariffs and trade volatility. You know, in the last year we've constantly been re optimizing sourcing and inventory strategies. I think we feel like we're on a bit of a hamster wheel as we pull our attention and focus our attention on trade and tariffs and really pulling it away from some of our product offerings and future growth. I think there's a few things that this causes for our automotive industry. One is, you know, a key part of the U.S. auto ecosystem is North America. And the U.S. mexico and Canada Trade agreement is critical for the effective and low cost trading in North America. As you know, that has largely held during the tariffs. But we also know that USMCA will undergo renegotiations here in July. And the planning for that and continuing to run war rooms to re optimize scenarios, there's going to be a lot more work before the outcomes of that renegotiation are known. And so that's creating even more volatility than just tariff announcements. In addition to that, what the trade volatility is driving increased tariffs, shifting demand, increasing labor costs, increasing freight costs, are all putting a lot of distress, financial distress on suppliers and so there's always a pressure that we're going to start to see gaps in the supply chain that can drive unplanned downtime, which can be significant for U.S. manufacturers. And then the third piece of the volatility related to trade really comes from logistics and shipping delays. And now with the situation in the Middle east, we're seeing significant delays to US manufacturers, approximately 20 days in things that are coming from China, 10 days in things that are coming from Europe, and over 30 days for materials and parts that are coming from the Middle East. And so we realize that the magnitude of all this continues to create a lot of uncertainty and really requires us to think about how we're designing our supply chains around tariffs and trade volatility differently. The second area that's really creating volatility for us is cyber in cyber, because it is such a supply chain issue. What we've seen in recent cyber incidents is that these things don't stay inside the four walls of the company that's impacted, but because of the interconnectedness of the automotive supply chain, they will cascade very quickly, both upstream and downstream, impacting tiers of suppliers, impacting dealers and distributors, and ultimately impacting OEMs and customers. And so what we see in these incidents is that operationally, hundreds of companies and hundreds of millions of dollars are put at risk. And so a new emerging threat that we're trying to guard against as we're managing our ongoing challenges with cost. And then the third thing I would talk about, much like the construction industry, is workforce and skill gaps. So when it comes to the workforce in manufacturing, we've had a skills gap for decades. The Manufacturing Institute recently reported that in the United states, we'll need 3.8 million workers by 2033, but there will be 1.9 million open positions. So 50% will go unfilled. Given our current workforce challenges, I think what's happening is we're looking at automation and robotics and things that will help fill that void, but they're not going to completely address our workforce issues. The workforce is shifting, and as we bring in more technology, we're going to see, I think, a new level of jobs emerge. Jobs that are, let's call it technical, skilled trades. An operator will now be required to not just deal with running the machine, but being able to analyze all of the data and solve problems directly in the flow of operations. And so that workforce gap that continues to grow and is coming at us so quickly, I think continues to create some of that volatility for us as an industry. So those three things are the things we're looking at today. It doesn't even mention some of the emerging risks like the demand side pull for defense production. And what will the automotive industry be asked to do to help us address now defense production gaps or the semiconductor competition that's starting to be created with hyperscalers that are winning the bids for capacity in semiconductors. And so there's no end to the dynamic environment that we're operating in today in automotive. And supply chain is such a strategic part of us being able to keep calm and carry on.
- [20:53]
A
I love that. Lisa, thank you very much. Clearly hearing the three of you speak then there's no shortage of challenges in each of your industries. Plenty of overlap. Interestingly, I think the underlying supply chain challenges shared across these industries are relatively similar. How they manifest as impacts is obviously different. But I think at this point, rather than spending too much more time sort of focusing on the negative and talking more about some of the issues, instead let's pivot to talk about how organizations might be able to get ahead of some of these challenges. What can organizations start doing to navigate this complexity? And Lisa, I'm going to come back to you first with a question about visibility. And by that I mean upstream supply chain visibility. Why will visibility never go out of style?
- [21:52]
B
So, you know, I think given today's business environment, I think our days of maximizing efficiency in automotive manufacturing are not enough. Right? I mean, single source supply, just in time, inventory management, concentrated operations, they drove profitability, they drove high volume productivity, but they also created a very fragile business model. And I think what we find today with all of this volatility is it makes that, that, that model inadequate. Now we will continue to need to drive efficiency, especially where I think risks are maybe more unlikely and where we have the ability to respond more effectively. But with risks like the supply chain, where things can be much more significant and even catastrophic, we have to start balancing efficiency with resilience. And in the supply chain, resilience starts with that visibility, visibility that's both upstream and downstream depending on where you sit in that supply chain. And the visibility isn't just about knowing what's there, but it's being able to have the data about the suppliers that are part of your ecosystem, taking that data that you have today and being able to enhance it so that you can really get in front of some of these unplanned business interruptions. Let me give you an example. Given the Middle east situation right now, we were brought in by fabricator to take a Look at their potential unplanned business interruption risks in the Middle East. Now, they didn't believe that they had any. They only saw just a couple of tier ones in the Middle east and they felt they had it well in hand. But using our Centrisk toolkit, we were able to see that they actually had almost 130 tier twos and over a dozen Tier Threes, all located in the Middle east that were a potential threat. The good thing was because of all of the data that we had available to augment what they had, they were able to prioritize the risks and are now working on business continuity planning and alternative supply strategies before interruptions actually occur. And so I think it's just an example that building this resiliency around the supply chain with visibility and risk data, it just gives you a much better picture of the network and allows you to truly create resilience.
- [24:40]
A
Lisa, thank you. A bit. A big focus there on resilience. I'm going to bring Eddie in here because I can't think of another sector where resilience doesn't have a more important outcome in keeping us all alive ultimately. So how much of what you've heard already from Lisa resonates from you and how is the sector that you operate in tackling some of the challenges we've discussed so far?
- [25:06]
D
Absolutely. I absolutely agree with Lisa on kind of the visibility. I think, adding to that, our clients are also interested in what's the impact of a potential loss in those areas that are identified, as Lisa mentioned. So our clients are doing a lot of modeling around the risks and the potential severity of those type of risks on the organization. And it allows them to also, as Lisa mentioned, look at the most important ones to them and disruptors within that supply chain and focus their risk mitigation strategies around there. So data is king in my opinion as well. The more you have, the more you have comfort within the underwriting community if you choose to transfer that risk and the more capacity you could potentially access in that world as well. So absolutely agree with that. The other area I'd like to comment on is really internally how companies are creating an infrastructure around supply chain. And it's not just the supply chain team, it's the risk management team, it's procurement, it's regulatory. In my space, specifically, how are you bringing these colleagues together to all kind of move in the same direction when talking about supply chain? Time and time again, I see companies where these efforts are fairly siloed, where maybe they're only called upon when there's an issue or a couple questions and it's not, hey, we're getting together, you know, on a monthly basis or quarterly basis to talk about these risks and how they're changing, how we're addressing them, how we create risk mitigation and risk transfer strategies around them. So I think there's a huge opportunity. I know a lot of this is happening already, but I think the more companies are connected internally around supply chain, obviously the better. And it enables kind of the culture of the company, I think, to think about supply chain risk in the same way and understand other constituents kind of perspectives of that risk. And it really broadens that discussion and ultimately helps with the, with the planning on how to mitigate that risk. So that, that would be my kind of main area, is how to really drive that within your organization.
- [27:41]
A
Eddie, thank you. You touched on a topic there that is close to my, my heart. I don't believe that achieving an enhanced level of resilience is for one part of the organization, one individual, one function to do on their own. And it's the same for supply chain risk management. There's a whole bunch of internal stakeholders, different functions that have to be working together and to collaborate on understanding the risk and then doing something about it. Joao, can I turn to you at this stage I'm quite keen to hear the other thoughts on ways organizations can further look at their, their existing supply chain risk management arrangements and improve them ultimately.
- [28:28]
C
And maybe, maybe let me stop by highlighting what are organizations already doing to, to manage that supply chain risk. And one of the things that you see, especially when you talk to global contractors that work in multiple territories, is that they kind of run local, local supply chains. So effectively, even though there might be European contractor working in North America, they already have a local source of labor, a local source of material and equipment that makes that management of the supply chain more easy to handle. It doesn't mean that they are completely permeable to the pressures in the end of the day, inflationary pressures on commodities that's going to affect them anyhow. But this is one of the ways that they are using to handle that risk. Secondly, you're certainly seeing more and more contractors going from a fixed price contracts to collaborative and open book style contracts. Under the collaboration style contracts, there is a sharing of pain and gain with the owner. So effectively, if there is a cost overrun, or in some cases one would wish it's going below budget, there is a sharing mechanism with the owner of the projects. There's other style of contracts where there's cost plus, so the contractor gets reimbursed for some of those costs overrun under that style of contracts. But the point being is I think there is a realization among owners that fixed priced contracts are nothing more than an illusion and if the contractor a few months down the line is unable to financially withstand with those inflationary pressures or with supply chain restrictions, the project fails. So that collaborative style contracts is now something that we're seeing a lot more in places like Australia, in the us in Canada, but also in Europe where for example we've got NAC4 contracts also JCT here in England released in 2024, a target cost contracts form. So you see that there's more of a trend of moving from fixed price to a sharing mechanism. Also I'll highlight digital maturity. The construction industry has gone through a digitalization of its services. The building information modeling, for example, has been a game changer and is now compulsory in several public sector contracts around the globe. But one thing that brings to the frame of this conversation, I read a study by Autodesk that highlights that digitally mature organizations are 41% more likely to diversify their supply chains. So that for me shows how a contractor that has worked on that digital maturity can use that to their competitive advantage. Lastly, I would highlight scenario planning. And obviously scenario planning in volatile times can be quite challenging. And you know, which scenario are you planning for, which challenge are you going to be revising? But there is certainly some cross benefits that you get from these scenario planning sessions. So even if you don't find the exact scenario that you're going to face, it certainly gets some agility and some muscle memory that helps you tackle those supply chain issues.
- [32:20]
A
Yeah, it's a really good point to fit to finish on. I mean, you can't plan for everything. Obviously you'll be spending the rest of your life chasing every single risk and before you've thought about it, there'll be another 10 that have appeared in the list. So putting in place robust scenario planning, robust business continuity planning to deal with a broad range of disruptive events is absolutely critical in this case. Not only does it protect you from disruption, helping you recover more quickly, it also helps I think, identify which resilience levers you should be pulling and when you should be pulling. So that could be more inventory, it could be holding or having arrangements with additional suppliers if one of your main suppliers was unable to deliver. Whereas Giles mentioned sort of looking at the contracts themselves, having a different approach to managing contract risk. So yeah, all that we've heard about so far is sort of focused on the challenges that these sectors are facing, some of the mitigations that organizations are implementing to manage some of these risks. I'm going to pivot now to think about how you might transfer some of this risk outside of the organization, if indeed organizations would like to like to do so. So I'm coming back to you first gel and ask you about what solutions insurance solutions might be available to them that that might benefit the specific industry risk exposures that that your sector is is looking at.
- [33:58]
C
In the construction insurance industry there is a product that is the delaying startup insurers that often is the focus of many, many clients. And the key message there is that a risk is only insurable as long as it remains precisely that a risk. If it becomes a certainty, then it's a lot more difficult to deal with it and to transfer to the insurance market. However, this creates an opportunity for clients to differentiate their risk against their peers. And to that effect we've seen clients for example building for redundancy. We've seen clients that for example would install an 8 megawatts turbine as opposed to a 6 megawatt turbine just to create that redundancy into the system. We've also seen supplier diversification. We've had clients reaching out to us to run past that insurance tier 2 suppliers so that they are approved. And that again speaks to the agility to be able to seek alternative sources of supply to be able to deliver the project successfully and on time. Stockpiling and and buying in advance. I mentioned earlier in the podcast about clients purchasing depending on availability. If a critical piece of equipment becomes available and is available right now, even if it is at the slight premium, then you want to get that piece of equipment into your projects. We've also seen some clients having spares on site that can be quite costly. But certainly if you wanted to deliver a project on time and on money and on budget, then certainly having spares on site has helped. But I'd like to pick up on the comment that Eddie mentioned which is the collaboration collaboration with owners, collaboration with subcontractors, collaboration with our clients advisors is a key element to try to differentiate their risk when they go into the market and seeking insurance from the global insurance market.
- [36:12]
A
Thank you. So quite a few options for organizations to think about. Lisa, how about in your sector, what are the options look like in your world?
- [36:22]
B
So certainly some of the things that John mentioned also apply in manufacturing. Looking at inventory strategies, making sure that we are managing and really storing the most important and critical components for a product. So that's certainly something that's changing. I would say one thing that's interesting for us, particularly in automotive, is contingent business interruption insurance. So, as all automotive manufacturers know, that's been a coverage that's been very hard to get and very costly for us in the automotive industry because of the nature of our ecosystem. But I think as we talked a bit earlier about having that visibility into your network and understanding the data around your suppliers, it helps you to understand which products, which components, and which suppliers are the most critical for your supply chain, and then you can tailor that contingent business interruption coverage to those specific situations. So rather than trying to cover so broadly, it's a different approach that can actually help with the most critical risk. In addition to that, I think for the complexity of the automotive supply chain, really, marine cargo stock throughput coverage is something that many manufacturers are now using to create really continuous coverage of inventory instead of separate policies for ocean and air, separate for warehousing, separate for trucking. And when you bring them all together, you can create coverage where there's really no gaps for something as complex as our global automotive ecosystem. And I think what we're seeing, you know, Allianz Trademark just reported that 80% of manufacturing firms have new trade routes in place. And when you have changing trade routes and you have transit times lengthening, as we discussed earlier, I think there's nothing more important than making sure that you have the right coverages and the coverages working in conjunction with each other to be able to address accumulated exposure and also to be able to address surety. What we're seeing is that in some cases, inadequate bonds can actually create immediate disruption for components coming into the ports in the United States and sometimes on very short notice. So having a coverage that can really span across all of your transportation needs and help you look at things more holistically. It comes back a bit to the collaboration discussion that we've had across all three industries where we really need to be working together, every company with their upstream and downstream partners, including their transportation providers, to really optimize the risk situation and be able to ensure for the best outcomes.
- [39:27]
A
Thank you, Lisa. Eddie, turning to you finally on that same question,
- [39:34]
D
and when Joe and Lisa talk about contingent business interruption, that's a massive exposure for our clients as well. So there's a common theme I think you're hearing amongst us, is if you have a level of comfort and understanding of your partners, the collaboration with them, there's an ability to, at least in the life sciences space, to purchase that contingent business interruption and coverage. Many of our clients aren't able to get the limits that they would want. And what can help that is that kind of visibility of who the partners are, how they're addressing risk. The good thing about the life sciences space is I mentioned earlier in the podcast the regulatory aspect. Most of our clients facilities are top notch, highly regulated, good risks from an insurance perspective. And so when you can kind of couple that with the, the knowledge and data around that network, you know, the outcome is typically good in terms of, of transferring that risk. And I would echo Lisa, I mean there are so many kind of insurance policies that play with them within the supply chain that, you know, coordinating those policies, looking at the, the bigger picture and you know, scenario planning around when those policies would respond is also a fantastic exercise. Let's not forget about cyber, as Lisa mentioned earlier in the discussion and the importance of cyber and supply chain and how it can impact not only the, the manufacturer, but the, but their partners and how that kind of trickles down to the rest of the supply chain. So a lot of common themes I think amongst the three industries, but some really good practices to consider.
- [41:38]
A
Yeah, thank you. Thank you Eddie and other two colleagues that I'm genuinely excited about the risk transfer piece of this conversation because, or this risk area because there is so much more that we can do now with better upstream supply chain risk data based on the CPI side and things like trade disruption insurance, which we've just brought a new product in the market relating to and lots more to come too. So look just that to the panel. I'd like you all just to imagine that you're only just, you know, your listeners and you're only just tuning in at this point in time. So I'd like you all to give a very quick summary of the main risks and opportunities relating to supply chain risk and resilience in your sectors. Jo, can I start with you?
- [42:37]
C
I mean, so as I explained earlier, the supply chain risk can come from different dimensions in the construction industry. It is certainly the commodity prices, but also the fight for talents, the quality of subcontractors, the quality of the supply chain, all of that adds up to the web. That is the supply chain risk that contractors around the globe face. There's several techniques that contractors have been utilizing to manage that risk, including running local supply chains sourced from local pool of labor and materials and equipment, but also having the digital maturity to be able to diversify their supply chains. However, for me the key takeaway, especially listening to Lisa and Addie, is the Collaboration and the open communication that is advisable for the construction industry to apply, collaborating with the owners, collaborating with the subcontractors, collaborating with their advisors, including of course, their risk and insurance broking advisors, is critical to be able to navigate those restraints.
- [43:57]
A
Eddie, how about you?
- [44:00]
D
So I think I mentioned this earlier. There's just very little room for error in the life sciences space given the criticality of the products and the need to get patients these products. So kind of the evolution of the industry and the supply chain, moving from a more centralized kind of model to a more fragmented to create resiliency, also adds more players to the game. So how does the industry stay on top of that trend? And it's really all about, again, common theme, visibility, data, collaboration. If you have all of those and can work within your companies to establish a foundation and everybody's moving in the same direction and obviously helps you mitigate that risk within your organization and also helps you communicate and effectively procure insurance if that's the choice you want to do to transfer that risk.
- [45:11]
A
And Lisa, can I finish with your thoughts?
- [45:14]
B
So, as I said when we started, volatility now is our environment, right? And being able to deal with the dynamics of everything that's happening in the market is more critical than ever from a risk management perspective. And so what I think I took away from today is that this conversation is no longer about a list of insurance coverages, but it's really about the events that occur and our ability to. To view those events more holistically. So what we can do through tabletop exercises, through collaboration across our enterprise, and then of course, collaboration more broadly with our partners, both partners for us in manufacturing, in our product design, development and build process, but also with our brokers and our insurers to make sure that everyone understands where we are in the game, what we're doing to mitigate those risks, and really, quite frankly, I think change the game and how we're looking at some of the emerging risks that we'll be facing, not just now, but in the next few years.
- [46:32]
A
Thank you, Lisa. And thank you to the panel. Some fantastic insights there. That's all for this edition of Risk in Context. We hope you enjoyed our discussion and thank you to the panel for joining me and thank you for listening. You can rate, review and subscribe to Risk in Context on Apple Podcasts or any other app you're using. You can also follow Marsh on LinkedIn and X. In addition to your podcast feed. You can find more episodes of Risk in Context and more insights from Marsh. Including details about our supply chain risk analysis platform mentioned earlier called Centrisk on our website marsh.com.