Within its 5th annual Natural Hazards Risk Atlas, risk analytics and advisory firm Verisk Maplecroft calls attention to high profile risk cities that happen to be today’s growing manufacturing and logistics hubs. This atlas assesses the natural hazard exposure of over 1300 global cities, selected for their economic importance in the coming decade. The analysis is somewhat unique in that it not only identifies regions most prone to natural hazards, but further quantifies the socio-economic resilience within these locations. From our Supply Chain Matters lens, it provides a yet another stark indicator that supply chain disruption and risk criteria were most likely not weighted high in past outsourcing or global based manufacturing and strategic sourcing strategies.

According to Verisk Maplecroft: “natural hazards constitute one of the most severe disruptors of business and supply chain continuity, and also threaten economic output and growth in some of the world’s key cities, especially for those located in emerging markets.” Maplecroft indicates that its annual analysis considers the combined risk posed by tropical storms and cyclones, floods, earthquakes, tsunamis, severe storms, wildfires, storm surges, volcanoes and landslides. This report’s executive summary further notes: “Of the 100 cities with the greatest exposure to natural hazards, 21 are located in the Philippines, 16 in China, 11 in Japan and 8 in Bangladesh.

If you have been following our Supply Chain Matters commentaries related to global supply chain disruptions and risk, these same regions comes up quite often.  This blog alone has amassed over 350 commentaries directly related to either supply chain disruption or risk indicators. The Philippines has emerged a hub for semiconductor assembly, high tech production and customer services while Bangladesh continues as the hub for apparel and clothing manufacturing.  China and Japan are both major hubs for multi-industry manufacturing and product development. Yet, natural hazards are a more frequent occurrence within specific emerging global supply chain hubs such as Bangladesh, Thailand, Japan, the Philippines and other regions. Such occurrences not only add to major disruption but added insurance and risk mitigation costs.

The continued reinforcement of such risk indices is another important reminder for strategic sourcing teams to actively foster balanced sourcing decision criteria, weighting landed costs with risk profiles.  Where higher supply chain risk and disruption indicators are prevalent within certain regions, there obviously needs to be a corresponding  alternative sourcing plan in-place.

Bob Ferrari