- Analysis based on a survey and interviews with over 275 food and drink businesses highlights risk drivers and opportunities to address growing threats in global food and drink supply chains
- Worth $11 trillion, the food and drink industry is an integral part of the global economy, and the safe movement of raw ingredients and products – from ‘farm to fork’ – is the backbone of international trade
- The first report in a three-part collaboration with WTW on supply chains. ‘Farm to fork: Rethinking food and drink supply chains’ focuses on the food and drink sector’s risk challenges and aims to spark product innovation
- The new research provides the insurance industry with a greater understanding of customer needs, protection gaps and potential insurance solutions
Lloyd’s, the world’s leading marketplace for commercial, corporate and specialty risk solutions has today published the first in a series of three reports exploring supply chain risk delivered in collaboration with WTW – ‘Farm to fork: Rethinking food and drink supply chains’.
The report focuses on the critical threat to the global food and drink industry due to the growing interconnectedness and complexity of global supply chains, which has increased the sector’s vulnerability to both natural perils, such as the effects of extreme weather, and manmade threats, like Russia’s invasion of Ukraine.
It outlines a practical roadmap based on increased collaboration between businesses, brokers and insurers, which identifies opportunities for insurance to innovate in the protection they can offer business and how supply chain risk management technologies, including data capture and visualisation can improve resilience.
The research identifies several key factors driving risk across food and drink supply chains, including economic pressures, demand changes, labour challenges, technology, transport, geopolitical and political risk, and climate change and sustainability, and highlights the opportunity for the insurance industry to develop new products to protect against the loss of Tier 2 suppliers, notifiable pests and diseases, transit delays and commodity price volatility.
It also identifies a lack of alignment between companies’ business-critical risks and the insurance cover they have purchased. For example, the research found that while 82% of businesses have at least some insurance for extreme weather impacts to their supply chain, less than a third (31%) believe that this is sufficient to address the risk to their operations.
Through its leadership of the Sustainable Markets Initiative Insurance Taskforce, Lloyd’s is exploring the adaptability of current crop insurance models to emerging countries which play a vital role in global food security.
Examples such as WTW’s Supply Chain Risk Diagnostic tool provides a framework to digitally model supply chain components, allowing businesses and insurers to more effectively measure, monitor and manage their risks.
“In today’s global economy, the food and drink industry is no stranger to the effects of shifting geopolitics and economic uncertainty. It is arguably more important than ever that businesses ensure the safe and timely transportation of critical and often perishable products which maintain a level of balance for global food security.Rebekah Clement, Sustainability Director at Lloyd’s
“Whilst insurance cover for supply chain risks does exist today, the findings in our research point to a lack of alignment between shifting key risk drivers for food and drink business and their current insurance cover. Uniquely positioned to respond, through initiatives like Lloyd’s Futureset, the Lloyd’s Lab and the SMI, the Lloyd’s market can further open lines of communication between food and drink businesses and their insurers and look to this research as roadmap for potential product innovation”.
“This Lloyd’s Futureset/WTW Research Network report is part of our ongoing commitment to keeping pace with the changing risk landscape to help protect food and drink businesses and support their successful growth.Sue Newton, Food and Drink Practice Leader GB, WTW
“We continue to deepen our understanding to drive improved supply chain resilience and to empower food and drink organisations’ in optimising their risk protection in the face of ongoing volatility, and this work with Lloyd’s brings an added perspective to this.”
Notes to Editors
- Lloyd’s and WTW have collaborated on a three-part series exploring supply chain risk. Report two and three on semiconductors and the transport and logistics sector will be published in 2023.
- The food and drink industry is one of the largest global industries, with a total revenue almost 11 trillion USD in 2021. It is a dynamic and complex sector that underpins global resilience.
- Behind this report is the data from over 275 risk, supply chain, and insurance practitioner interviews. These perspectives have provided real-life, practical insights into the challenges that companies across the food and drink sector are facing during a period of heightened supply chain risks - from the conflict in Ukraine, to increased geopolitical tensions and inflation.
- In addition to these interviews, we have combined proprietary data and reports with a range of thought leadership and third-party analysis to develop insights that can help build common understanding between the industry and insurers
- Full list of insurance development opportunities: Loss of Tier 2 supplier, shortfall in yield of quality, notifiable pests and diseases, transit delays, price volatility and reputation damage.
- Futureset is Lloyd’s global platform and community dedicated to driving greater societal and economic resilience to the world’s most challenging risks. By bringing together diverse perspectives, and through cutting-edge risk insight, intelligence, and cross-industry dialogue on the most complex and fast-changing risks faced by communities, businesses and countries, Lloyd’s Futureset aims to build greater societal understanding and collaboration to find solutions and support greater preparedness, protection and resilience.
- More news and information available from lloyds.com
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pressoffice@lloyds.comAbout Lloyd’s
Lloyd’s is the world’s leading marketplace for commercial, corporate and specialty risk solutions. Through the collective intelligence and expertise of the market’s underwriters and brokers, we’re sharing risk to create a braver world.
The Lloyd’s market offers the resources, capability, and insight to develop new and innovative products for customers in any industry, on any scale, in more than 200 territories.
We’re made up of more than 50 leading insurance companies, over 200 registered Lloyd’s brokers and a global network of over 4,000 local coverholders. Behind the Lloyd’s market is the Corporation: an independent organisation and regulator working to maintain the market's successful reputation and operation.
We’re working to build solutions for the most current and prevalent threats. As Chair of the Insurance Task Force for HRH The Prince of Wales’s Sustainable Markets Initiative, Lloyd’s is bringing the industry together to insure the transition to net zero. Our research community is pooling expertise from across the industry to provide cutting edge insight on systemic risks from climate change to cyber security.
And through our digital-led strategy, The Future at Lloyd’s, we’re making it easier and cheaper to place, price and process cover in the Lloyd’s market.
About WTW
At WTW (NASDAQ: WTW), we provide data-driven, insight-led solutions in the areas of people, risk and capital. Leveraging the global view and local expertise of our colleagues serving 140 countries and markets, we help organizations sharpen their strategy, enhance organizational resilience, motivate their workforce and maximize performance.
Working shoulder to shoulder with our clients, we uncover opportunities for sustainable success—and provide perspective that moves you.
Learn more at wtwco.com.