by Brianna Crandall — December 4, 2015—The Insurance Institute for Business & Home Safety (IBHS), citing a new U.S. Government Accountability Office (GAO) report (Federal Supply Chains: Opportunities to Improve the Management of Climate-Related Risks), recently urged the federal government and private sector to better understand and protect against supply chain risks from weather-related events.
The GAO notes the federal government spent about $445 billion in fiscal year 2014 for goods and services such as disaster response products and telecommunications. Various federal agencies have had their supply chains disrupted by weather-related events, such as Hurricane Sandy.
Federal agencies have developed, or begun developing, adaptation plans in response to executive orders and implementing guidance issued by the White House Council for Environmental Quality (CEQ), according to IBHS. Climate-related risks to federal supply chains were expected to be specifically included.
Julie Rochman, president and CEO of IBHS, points out:
If the federal government hardens their supply chains, which would help increase the reliability of public-supplied goods and services, that sets a good example for the private sector as well. We hear a lot of talk about ‘running government like a business.’ Well-run businesses create and test continuity plans.
Government agencies that provide products and services that people and private sector businesses depend upon have an obligation to be ready to continue operations when disasters large and small occur, reminds IBHS. The GAO report recommends that a more complete understanding of climate-related risks be developed and acted upon. Such actions could serve to make our nation more resilient.
Both private sector and public sector supply chains are disrupted by earthquakes, floods, hurricanes, winter weather, thunderstorms, tornadoes, and wildland fires. “There is no area of our country that is without real risk,” Rochman noted, “so preparing ahead of time is the only prudent thing to do.”
Like the federal government, business owners need to understand and be prepared for disasters that occur in their community or across the globe. Absent planning, supply chain breakdowns also can have a devastating effect on the bottom line.
IBHS has developed information for businesses to help them understand and reduce supply chain risk. “Supply Management: Reducing the Weak Links in Your Business’ Supply Chain” discusses the importance of business continuity planning and how vulnerabilities in the overall supply chain can lead to costly business disruption. Focusing on the following steps will help businesses strengthen supply chains:
- Identify key links in the supply chain, including prioritizing critical suppliers.
- Assess large and small critical suppliers’ vulnerability to natural and man-made hazards and confirm they have business continuity plans in place.
- Understand early warning signs of supplier trouble, and be ready with contingency plans.
- Closely monitor regions where natural and man-made disasters have hit that might impact key suppliers.
Rochman continues:
A broken link in any part of a supply chain can cause a truly catastrophic domino effect. Planning for supply chain disruptions helps business — or government agencies — stay in business. Having a plan reduces business vulnerability and provides organizations with a competitive edge in our global economy.
IBHS’s OFB-EZ (Open for Business-EZ) is a free, easy-to-use business continuity planning toolkit designed to help small businesses successfully prepare and recover from any type of disaster. Using OFB-EZ gives businesses owners the tools to better understand the risks they face and make a plan for how to resume operations, contact key suppliers, vendors and employees, access data, and where to go for help after disaster strikes.
OFB-EZ is also available from IBHS at no charge in Adobe Acrobat (pdf) and Microsoft Word formats. Additional disaster preparedness resources for businesses and consumers are available on the IBHS Business Protection Web page.
