Supply Chain Natural Disaster Risk

Managing Natural Disaster Risk in Your Supply Chain
Be aware of natural disasters, like tornados

What is Supply Chain Natural Disaster Risk?

Supply chain natural disaster risk is the possibility that your supply chain is disrupted by a hurricane, earthquake or other natural hazard. In a world of globalization and climate change, this type of risk is only increasing.

Natural Disaster Risk Example: Hurricane Harvey

Hurricane Harvey was a tropical cyclone that hit the United States in August 2017. It caused major catastrophic damage in the area of Houston, TX, mostly triggered by flooding.

Hurricane Harvey had immediate effects on global supply chains—largely due to the significance of Houston’s port, which receives billions of dollars of imports from countries like China, Mexico, Germany, Brazil and the Netherlands. Estimates state that nearly 800 factories, warehouses and distribution centers were affected by Hurricane Harvey, many operating in the high-tech industry.

Like all hurricanes, Hurricane Harvey only lasted a few days. However, its effect on global supply chains was felt for months after the event.

 3 Things To Know

1. Natural Disaster Risk Is Increasing

Most studies point to the fact that climate change—the gradual warming of the earth—is resulting in more extreme weather patterns. This means that the chance of natural disasters such as hurricanes is likely to increase in the coming years.

 

2. Globalization Makes the Problem Worse

Gone are the days of local supply chains. In a world of globalization, a natural disaster can directly affect your business—whether it’s right next door or on a completely different continent.

 

3. It's Time To Develop a Plan

Bottom line: No one can stop a hurricane, earthquake or tsunami—and it’s hard to predict them very far in advance. This means that the best thing you can do to combat natural disaster risk is to have the technology you need to actively monitor and mitigate this type of risk.  

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