What are the biggest risks for food and beverage companies? | Insurance Business America Risk Management News What are the biggest risks for food and beverage companies?
Experts highlight evolving risks across industries
Risk Management News
Jonalyn Cueto
According to WTW's Global Food & Beverage Risk Outlook 2024, business interruption is the leading internal risk for almost half of food and beverage companies. The report, which surveyed 400 senior decision makers in the industry, found that 48% of companies see business interruption as the biggest threat to their success, closely followed by supply chain risk, cited by 40% of respondents.
The industry faces a volatile environment with global instability, conflict, climate change and cost of living crises. Against this backdrop, navigating potential disruptions has become second nature for many companies. Over 40% of companies surveyed are looking to strengthen their financial resilience, citing improved liquidity as their top strategic objective over the next two years. Other priorities include reducing costs (38%) and stabilizing operations (35%).
Rapidly changing consumer preferences also pose a major challenge, with 36% of companies expressing concern about keeping up with these changes. However, the sector also presents opportunities as companies adapt to new consumer trends: More than half (53%) see the adoption of sustainability and health and wellness as major opportunities, reflecting increased consumer interest in these areas.
Building resilience amid uncertainty
Despite the challenges, businesses are actively working to build resilience: Nearly half (47%) review their business continuity plans every six months, and 31% review them quarterly. However, 29% of businesses report that their insurance only covers physical damage from extreme weather and has no provision for business interruption, a key component of recovery and resilience.
Simon Lasher, global food and beverage leader at WTW, highlighted the evolving nature of risks.
“Many of the challenges food and beverage companies face today are on a different level than those they have overcome in the past,” he said. “Geopolitical instability, conflict, rising costs of living, climate change, digitalization, and meeting consumer needs and demands are increasingly difficult in a rapidly changing world.” He advises companies to reevaluate their key issues, areas of focus, and risk management strategies to prepare for a range of outcomes.
The study revealed several findings, including:
Disruption concerns: Business interruption and supply chain issues are the top internal risks, with global instability raising concerns over potential disruptions. Growth opportunities: Sustainability and health and wellness are seen as key growth drivers, with 53% of companies identifying these as key opportunities. Climate change risks: Climate change is a significant environmental threat, with 71% of companies identifying this as the top risk. The sector is increasingly feeling the impact of climate-related events such as floods and droughts. Business resilience: There is an increasing focus on strengthening business resilience, reflected in frequent reviews of business continuity plans. External challenges: Economic factors and geopolitical tensions are complicating risk management strategies, cited by 52% and 48% of companies, respectively.
For the full report, see the WTW website.
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