Despite adapting processes, as we enter 2025, the world is still facing new challenges to supply chains. The Houthi attacks against commercial and naval ships in the Red Sea, the low water levels in the Panama Canal due to the drought, numerous strikes and trade wars have all impacted the supply chain.

A recent report showed that more than two-thirds of organisations (67.4%) were still suffering with supply chain issues in 2024. Most of these respondents reported that they experienced between one and ten disruptions per year.

What are the most common causes of supply chain disruption leading into 2025?

The most common cause for supply chain disruption in 2024 was ‘third party failure’ which impacted 43.6%.
The second most common cause for supply chain disruptions were cyber-attacks, which impacted 34% of organisations followed by adverse weather and natural disasters which both affected 26.6%. Fifth place saw transport network disruption, which impacted 24.5%.

To limit the impact of these frequent points of failure, organisations should conduct a supply chain mapping and due diligence to highlight key trends and reduce their risk where possible.

According to the report, 36.7% of respondents don’t examine climate risks, however considering the growing impact of climate change on supply chains 87.8% of respondents saw the value of seeking to identify their supply chain’s exposure to weather-related events and natural disasters.

The importance of effective business continuity planning

To better equip and prepare themselves, organisations are paying more attention than ever to the business continuity arrangements of their suppliers, regardless of the tier of the supply chain. Organisations want to see that suppliers are actively committed to mitigating risks that could result in a disruption of the supply chain.

This goes beyond just ensuring they have a business continuity plan (BCP), organisations want to evaluate and understand the BCP of their critical suppliers. Some organisations have engaged in joint exercises with their suppliers, while others have hosted workshops and awareness campaigns.

The importance of having insurance to mitigate against supply chain disruptions

Almost half (46.7%) of organisations have called on their insurance to help support the financial impact caused by supply chain disruption in the past year. This shows almost a 10% increase from 2023 where 37.4% of organisations leveraged their insurance.

Having adequate insurance to mitigate the financial implications of supply chain disruption works best when used alongside top-notch resilience strategies. 24% of the organisations who had insurance were able to recover 50-100% of their losses.

Last year saw a notable increase in organisations taking out insurance to assist with financial loss from supply chain disruptions. In addition to this, organisations put more emphasis than ever on ensuring their contractors had suitable insurance too. For some, it was expressly written into the contract.

Caring for your workforce with small business insurance solutions from Towergate

At Towergate, we offer a number of insurance solutions that can help you to protect your business against the unexpected.

Our team of dedicated advisers are highly trained and will handle your enquiries confidentially. We offer suitably priced products from a range of carefully selected insurers.

For more information on business insurance, get in touch with your usual Towergate contact.

Source: thebci.org/news/supply-chain-disruptions-drive-increased-tier-mapping-and-insurance-uptake.html

About the author

Alison Wild BCom (Hons), FMAAT, MATT, Taxation Technician is a highly respected industry professional who has been working with and advising SMEs in areas including tax, pensions, insurance and marketing for over 25 years. She is a Fellow member of the Association of Accounting Technicians (AAT) and Association of Tax Technicians (ATT) and also has 20 years' experience as a residential landlord.

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