Companies panic-buying supplies is one factor adding further stress to the supply chain, says one expert in a panel discussion at RIMS Canada Conference in Halifax. But solutions—like contingent business interruption (CBI), shipping via multiple methods and shrinking the supply chain—can be implemented to mitigate these disruptions.
“It’s similar to the beginning of the pandemic when there was a shortage of toilet paper,” says Darren Tasker, head of energy & construction at Allianz Global Corporate & Specialty Americas. “Companies have pivoted from a ‘just in time’ model to a ‘just in case’ model, which is even causing further strain on the supplies.”
But one way companies can mitigate the risk of supply chain shortages and avoid panic buying is by finding alternative ways to ship—so that they’re not putting all their eggs (or toilet paper) in one basket.
“Rail is huge in Canada; that’s how we ship a lot of things,” says Katherine Dawal, vice president of risk management at NFP Canada. “As we saw in 2021, there were a lot of disruptions—floods, fires, you name it, it’s pretty much happened—but we are an economy that relies on rail.”
To avoid supply chain panic buying, risk managers and brokers can ensure their clients have alternative routes, so their supply shipments aren’t reliant on one route or port.
“Maybe we don’t just ship by rail, we also ship by truck,” poses Dawal, “And if we need to do that, what are the changes that we need to make in our operations in order for that to happen?”
Shrinking the supply chain would also help matters, Dawal adds. “Within the next 12 months and even further, what we’re going to likely see globally is shrinking the supply chain so that it’s not so far away. It might be a little bit of a short-term pain, but it’ll definitely be long-term more beneficial.”
“If we can reduce that supply chain—so not requiring so many things from overseas, [and you can get it in] your backyard and Canada—it might cost a little bit more to get that that piece of equipment, but overall, it’s not going to take hopefully, as long to [procure] things.”
The industry can also ensure their clients have contingent business interruption coverage in place to avoid last-minute panic buying of supplies in the event their supply chain is disrupted, says Malik Abdur, executive underwriter at Allianz Global Corporate & Specialty.
Overall, he warns the industry to “expect more disruptions, because the demand is not going down. There will be a little bit more challenge coming in the future as well.”