Wel elco come me, FD FDF W F Webi ebinar nar: : Ri Risk sk Man Manage agemen ment t an and C d Cov ovid-19 19 - Presented by Global Counsel Wednesday 10 June 2020, 11:00am – 12:00pm
Se Sessi ssion on On One - Preparing for Risks Under the Radar Stephen Adams, Senior Director, Global Counsel
Risks under the radar Things risk managers know Stephen Adams and Elizabeth Beall Global Counsel
Welcome Stephen Adams Elizabeth Beall Senior Director Practice Lead Global Counsel Global Counsel
PART 1: What covid-19 reminds us about risk PART 2: Lessons from the CO2 crisis PART 3: Anticipating regulatory change Q&A
PART 1 What covid-19 reminds us about risk
What risk managers know Any supply chain carries risk - international supply chains multiply risk variables Networks of locally optimised systems are not necessarily globally optimised systems – globally optimised systems can be vulnerable to localised change Efficiency can be a slippery term to define. On time in full? Minimised inventory? Maximised resilience? Efficient systems are not always robust
Covid-19 and policy risk Policy actions cascade , compound and create the context of their own removal
Covid-19 and policy risk What is a political option? What is a political imperative? What happens to the ‘rulebook’ under pressure? ‘Risks under the radar’ can be risks that emerge from rapid change to the policy ‘playbook’ and from our assumptions about what policymakers will or will not do
Covid-19 and product innovation Hospital ICU ventilator 20+ core elements 100s of subcomponents 50+ countries Simplify product composition NASA JPL VITAL 700 fewer components than conventional ventilator Simplify/ Re-shore diversify supply chain
Se Session ion Tw Two o - Deep dive into specific examples within food and drink supply chains and how to rethink risk in light of Covid19 Elizabeth Beall, Practice Lead, Global Counsel
PART 2 Lessons from the CO2 ‘crisis’
The CO2 problem By-product No easy substitute Small number of producers Difficult to Difficult to store transport 13
Risk predictors Weak substitutability. The product cannot be easily substituted with other substances. Supply and demand disconnect . The product is a by-product of another substance or is heavily reliant on the supply of inputs which are not stimulated by demand for the product. Supplier diversity . There are a small number of producers of the product and therefore it is difficult to find other sources. Transportation. The product has certain requirements for transport which make it difficult and/or costly to transport over long distance. Storage and inventory. The product has certain characteristics that make either long-term storage or large quantity storage difficult or costly.
Applying this model Supply/ Supply Difficult Difficult Substitute demand diversity transport storage Glycerine Phosphate Ammonia ADN
Glycerine: applying the risk model Farmers Primary Retailers Secondary processors processors Dairy Processed Food distribution system products meat Transport / Packaging Grains Condiments
Glycerine: lessons from the model Glycerine supply chain Supply : 66% of the world’s supply of glycerine comes from biodiesel which is decreasing due to preference for other fuels Demand : 24% is used in food products with demand increasing due to increasing living standards and demand for lower fat, lower sugar, and plant-based diets
PART 3 Anticipating regulatory change
Falling out of love with plastic New regulation on plastic bags 18 8 4 4 3 0 0 1990 1995 2000 2005 2010 2015 2018
Three key variables for regulatory risk Consumer Broad latent or vocal consumer support support for for change, backed by evidence of change? consumer preferences. No legal No international legal restrictions or barriers? otherwise which would restrict action – or a government is willing to breach these Imperative A major political or practical change that to act? disrupts the status quo and creates an imperative act – policy, political change, natural disaster, global pandemic .
Applying this model Consumer Imperative to Legal barriers support act? ‘Sin - taxing’ VAT differentiation SPS controls on EU supply chains Trade dispute escalation
VAT differentiation: applying the model + + Consumer support Legal barriers Imperative to act? Open to reducing meat Not consumption
Read the report https://www.fdf.org.uk/publicgeneral/risks-under-radar-april2020.pdf
Contacts Elizabeth Beall e.beall@global-counsel.co.uk Stephen Adams s.adams@global-counsel.co.uk
Tha Thank nk yo you u for for att attending ending
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