RISK IN THE SUPPLY
CHAIN
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Supply Chain Threats Abound – Security & Political Risk
© Control Risks, 2010 Source: www.riskmap-controlrisks.com
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Supply Chain Threats Abound – Corruption / Bribery
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Supply Chain Threats Abound – Cargo Theft
Courtesy: © Freightwatch International, 2010
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Supply Chain Threats Abound – Cyclones / Hurricanes
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Risk Management – A Conscious Choice
Each organization must determine its own appetite for risk.
Risk Assessment – Companies gather internal and external
intelligence about their supply chains and the threat environment in order
to make well-informed risk choices for the enterprise.
Risk Avoidance – Companies may change business practices (e.g.,
by changing sourcing locations) to avoid a high risk practice or area.
Risk Acceptance – Companies may decide to accept or ‘self-insure
for’ the risk. Doing nothing means accepting the risk. Risk management
implies doing so knowingly, after reviewing intelligence about the threats.
Risk Control – Companies may choose to manage a risk by putting
controls in place either to reduce the likelihood that the risk will materialize
or to reduce the impact on the business should an event occur.
Risk Transfer -- Companies may transfer risks to insurance markets.
Such transfers may work in tandem with a risk control strategy. Certain
risks, such as damage to reputation, are inherently uninsurable.
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Supply Chain Threats
Global Economy
Laws and
Regulations
Political Unrest
Cargo Theft
&
Smuggling
Terrorism
Natural Disasters
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Labor
Disruptions
Supply Chain Attack
Security Programs
Robust, Comprehensive, Documented
Personnel Security
Incident Reporting & Analysis
Information Security
Service Provider Management
Access Control
Physical Security / Systems
Training & Awareness
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Measure, Audit
Ownership
Enhanced Security
Goods In Transit
Enhanced Security Solutions
Security Escorts
Packaging
Team Drivers
Tracking & Tracing
GPS, Geo-Fencing
Communication
Tamper-Evident Technology &
Deterrents
Insurance!!
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Supply Chain Protection
Security Programs
Government, Industry, Partnerships
C-TPAT
BASC & TAPA
FAST
TSA - IACSSP, CCSP
PIP
AEO
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OSHA
More Information
• U.S. Department of Homeland Security (DHS) and
Customs & Border Protection (CBP)
• U.S.: Customs-Trade Partnership Against Terrorism
(C-TPAT), Free and Secure Trade (FAST)
• Canada: Partners in Protection (PIP)
• European Union: Authorized Economic Operator (AEO)
• Latin America: Business Alliance for Secure Commerce
(BASC)
• TAPA: Transported Asset Protection Association
• US: Transportation Security Administration, IACSSP
• US: OSHA (Business Continuity & Emergency Preparedness)
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SUPPLY CHAIN
Incoterms ®
• Incoterms ® = INternational COmmercial TERMS
• First Developed by the International Chamber of
Commerce (located in Paris) in 1936 and revised in 1953,
1967, 1976, 1980, 1990, 2000 & 2010
• INCOTERMS ® are available in their full form through
the ICC's publication, "INCOTERMS ® 2010".
• The purpose of Incoterms ® is to provide a set of
international rules for the interpretation of the most
commonly used trade terms in foreign trade. COST RISK - OBLIGATION
• Terms of sale International business vs domestic (UCC)
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What Incoterms ® 2010 are
not
• LAW. They must be specified the contract (sales order,
purchase order) in order to apply
• They do not address passage of title or recognition of
revenue
• They are not credit terms
• Do not protect a party from risk of loss
• Define the remedies for breach of contract
• Address more than one contract (drop shipments)
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How to use Incoterms correctly
• All Incoterms® must accompany a named place – the
more specific the better
• Ensure both parties are using the correct version of
Incoterms
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Named place (on seller’s side)
• EXW
• FCA
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Named place (on the buyers side)
•
•
•
•
•
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CPT
CIP
DAT
DAP
DDP
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Marine only
FAS
FOB
CFR
CIF
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Incoterms ® 2010
Information gathered from International Chamber of
Commerce and available in full form in the Incoterms
Chamber of Commerce Incoterms 2010
iccbooksusa.com
www.iccwbo.org/incoterms
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Accidents happen….
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Is your freight on the water or in the water?
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When are Ocean Carriers NOT Liable?
Neither the carrier or ship owner will be responsible for loss or damage arising or resulting from:
1.
Act, neglect, or default of the master, mariner, pilot, or the servants of the carrier
in the navigation or in the management of the ship.
2.
Fire, unless caused by the actual fault or privity of the carrier.
3.
Perils, danger, and accidents of the sea or of other navigable waters.
4.
Act of God.
5.
Act of war.
6.
Act of public enemies.
7.
Arrest or restraint of princes, rulers or people, or seizure under legal process.
8.
Quarantine restrictions.
9.
Act or omission of the shipper or owner of the goods, his agent or representative.
10. Strikers or lockouts or stoppage or restraint of labor from whatever cause, whether partial or
general; Provided that nothing herein contained shall be construed to relieve a carrier from
responsibility for the carrier's own acts
11. Riots and civil commotion's.
12. Saving or attempting to save life or property at sea.
13. Wastage in bulk or weight or any other loss or damage arising from inherent defect, quality, or
vice of the goods.
14. Insufficiency of packing.
15. Insufficiency or inadequacy of marks.
16. Latent defects not discoverable by due diligence.
17. Any other cause arising without the actual fault and privity of the carrier without the fault or
neglect of the agents or servants of the carrier, but the burden of proof shall be on the person
claiming the benefit of this exception to show that neither the actual fault or privity of the carrier
nor the fault or neglect of the agents or servants of the carrier contributed to the loss or damage.
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Now what if this happens….
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Pacific Coast Hwy, CA.
Loss in Excess of US$800,000
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What about Warehouse Liability?
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Be prepared for the unexpected!
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What Protects Me From Carrier’s Liability?
• Carriers Liability is very limited and you must
prove carrier was at fault
• Protect yourself with All-Risk Cargo Insurance
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CLAIMS MANAGEMENT
• What is my appetite for risk? Deductible….
• Who purchases insurance / their decisions….
• Which departments are involved?
• How is it being signed for?
• Why is damage happening? Trends
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<<< Title | Company Info | Supply Chain | Products and Services | Management | Conclusion | >>>
© 2007
Q&A
Kerri Sykes
Regional Risk & Insurance Manager
Expeditors International – North Central
Phone: (734) 857-5047
E-mail: kerri.sykes@expeditors.com
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© 2010 Expeditors International of Washington, Inc.
All information contained herein is business confidential and proprietary and may not be reproduced in any form without advance written consent of an authorized officer of the copyright holder.