In its annual “Event & Disaster Report,” risk intelligence platform provider Adapt Ready has shed light on the transformative impact of both man-made and natural catastrophes on global supply chains and the energy sector throughout 2023.
The report underscores the escalating consequences of heightened global interconnectivity and urges insurers and risk managers to brace for a paradigm shift in handling risks.
The comprehensive report offers an economic overview of major global events in 2023, delving into the ramifications for various sectors.
Detailed case studies explore the enduring repercussions of the Russia/Ukraine conflict and the year’s most costly natural disasters, including Hurricane Idalia, Canadian wildfires, Typhoon Doksuri, and the earthquake affecting Turkey and Syria.
Among the sectors most severely affected in 2023 were automotive, construction, energy, and chemicals, with infrastructure taking the hardest hit, incurring economic losses surpassing $151 billion USD.
Ukraine, in particular, bore the brunt of infrastructure losses, with over 27,000 kilometers of roads damaged.
The report highlights the vulnerability introduced by increased global interconnectivity, exemplified by disruptions in the production of critical materials such as palladium and semiconductor-grade nickel.
Russia, the world’s leading palladium producer and second-largest producer of semiconductor-grade nickel, experienced supply chain interruptions that reverberated across major industries, affecting companies like General Motors, Toyota, and the Volkswagen group.
The production of electronics giants Apple, Samsung, and Sony also faced potential setbacks.
The five disaster events examined in the report impacted local energy industries to varying degrees. Notably, the Turkey and Syria earthquake had a significant effect on the region’s energy sector.
The 7.8 magnitude quake damaged gas transmission lines and led to the shutdown of the Ceyhan oil terminal in southern Turkey, disrupting crude oil exports from Iraq and Azerbaijan.
Adapt Ready’s CEO and Co-Founder, Shruthi Rao, emphasised the report’s key finding, stating, “Our report clearly shows that greater global connectivity is leading to further reaching and more complex supply chains. In turn, this is leading to increased complexity when it comes to understanding and managing the potential risks they are exposed to. In an era of heightened geo-political uncertainty and evolving natural catastrophe risk due to climate change, insurers, brokers and corporate risk managers are facing a challenge to oversee and navigate this.”
“Adapt Ready is focused on not only providing deeper insight into global supply chain and energy sector risk but also helping corporate risk managers and their broker/insurer partners take steps to manage and mitigate this increasingly complex challenge,” Rao added.
