Your Suppliers: What Happens If Catastrophe Strikes?

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Earthquakes, tsunamis, and other natural disasters—those are all things that happen in other parts of the world, or at least other parts of the country, so that’s one less thing you have to worry about when insuring your business, right?


When you last discussed your potential strategic risks with your insurance agent, did you account for what might happen if there is a break in your supply chain?

Most companies didn’t—until the Japanese earthquake and tsunami hit in the spring of 2011. That put many U.S. businesses on notice about the possibility of a major interruption in their supply chains. If a major disaster could hit Japan, it could just as easily happen in places like Taiwan, Vietnam, India, and Malaysia, where companies have outsourced much of their work.

In their drive to trim costs and boost their efficiency of their operations, many businesses have overlooked the potential risks associated with extending their supply chains to disaster-prone regions of the world.

A major interruption could not only cut into your profit margins, but also scare away investors and even cost you customers.

Earlier this year, another disaster, Hurricane Irene, drove the point home, serving as a painful reminder that supply chains can even be broken by natural disasters far closer to home.

Deland, Gibson recommends developing a supply chain risk management plan, which takes into account the scope of your operations, transportation, and the diversity of your supply chain, among other factors.

Don’t just think strictly in terms of business locations. One Texas and Louisiana-based manufacturer had a contingency plan for ensuring its supply chain continued in spite of a hurricane. What the company did not anticipate was all the problems it would face in getting its employees from their hurricane-stricken communities to their workplaces.

Many indirect issues can arise from such situations like the loss of a key distributor or employee. Take the pre-loss steps with Deland, Gibson to mitigate these situations. Call us today at 781-237-1515 to discuss your business insurance options. For more information, visit our Web site:

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