What is the biggest risk for food and beverage companies? | Insurance business America
Expert highlights evolving nature of risks across industry
Risk management news
By Jonalyn Cueto
According to the Global Food and Beverage Risk Outlook 2024 published by WTW, business interruptions are the top internal risk for nearly half of food and beverage companies. The report, which surveyed 400 senior industry decision makers, found that 48% of companies view business interruption as the biggest threat to their success. Supply chain risk follows closely behind, cited by 40% of respondents.
The industry faces a turbulent environment characterized by global instability, conflict, climate change and a cost of living crisis. With this in mind, managing potential disruptions has become the norm for many companies. Over 40% of companies surveyed see increasing liquidity as a top strategic goal for the next two years in order to strengthen their financial resilience. Other priorities include reducing costs (38%) and stabilizing the business (35%).
Rapidly changing consumer preferences are also a major challenge, with 36% of companies expressing concerns about keeping up with these changes. However, this area also presents opportunities as companies adapt to new consumer trends. More than half (53%) see a major opportunity in leveraging sustainability and health and wellness, reflecting growing consumer interest in these areas.
Strengthening resilience amid uncertainties
Despite the challenges, companies are proactively working to build resilience. Almost half (47%) review their business continuity plans every six months, while 31% do so quarterly. However, 29% of businesses say their insurance only covers property damage caused by extreme weather and does not provide for business interruption – a critical factor in recovery and resilience.
Simon Lusher, global food and beverage leader at WTW, highlighted the evolving nature of the risks.
“Many of the challenges facing food and beverage companies today are of a different nature than those they have overcome before,” he said. “Geopolitical instability, conflict and cost of living crises, as well as climate change, digitalization and meeting consumer needs and wants are becoming increasingly difficult in a rapidly changing world.” He advises companies to re-evaluate their critical issues, focus areas and risk management strategies to focus on different Prepare results.
The survey highlights several findings including:
- Concerns about disruption: Business interruptions and supply chain issues are the top internal risks, with global instability increasing concerns about potential disruptions.
- Growth Opportunities: Sustainability and health and wellness are viewed as key growth drivers and identified as key opportunities by 53% of companies.
- Climate change risk: Climate change poses a significant environmental threat, with 71% of companies seeing it as the biggest risk. The industry is increasingly feeling the impact of climate-related events such as floods and droughts.
- Business resilience: There is increasing emphasis on improving business resilience, which is reflected in the frequent review of business continuity plans.
- External challenges: Economic factors and geopolitical tensions complicate risk management strategies, cited by 52% and 48% of companies, respectively.
The full report can be found on the WTW website.
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2024-05-24 05:40:00
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