World Economic Forum, Verisk Maplecroft report analyses future risks to resilience of consumer industries
The World Economic Forum (WEF) and Verisk Maplecroft have launched a new joint report analysing threats to the resilience of the consumer industries over the next decade and beyond. The paper finds that agriculture is the weakest link in consumer supply chains due to its high exposure to a range of ESG and political risks that consumer industries will have to prioritise if they are to build resilience in the face of an increasingly interconnected global risk landscape.
The paper, Rethinking resilience in an age of unpredictability: Decoding the future risk landscape for the consumer industries, utilises a unique horizon scanning methodology, combining Verisk Maplecroft’s Industry Risk Analytics, which quantify 51 environmental, social and governance (ESG) and political risks across 198 countries for 80 different industries, with analysis from its team of political, human rights and environmental experts.
According to the report, in the face of rising uncertainty and accelerating global risk, corporations and investors can no longer afford to consider resilience as a defensive measure. Instead, it must be brought to the forefront of strategic thinking and engrained within their growth strategies. The winners will be those that can successfully anticipate a progressively opaque and complex world that is shaped by increasingly interconnected environmental, social and political risks.
Given the scope of their supply chains, economic interdependency, and susceptibility to both natural and manmade threats, the analysis found that consumer industries will experience a greater degree of exposure and sensitivity to these threats.
Analysing all 18 sectors associated with the consumer industries showed that civil unrest; exposure to modern slavery violations and hardening human rights due diligence laws; and climate change vulnerability were the top three risks confronting consumer industries, and in particular, the agriculture sector, over the short, medium and long-term (across the 2, 5, and 10+ year time horizons).
Among the 80 industries included in Verisk Maplecroft’s Industry Risk Analytics, agriculture stood out as the highest risk for both civil unrest and climate change vulnerability, while it was second only to metals and mining for modern slavery risks.
The report, which builds on a much more extensive white paper published by the WEF and Verisk on the value of rethinking and prioritising organisational resilience, was produced for members of the World Economic Forum’s Consumer Industries Partner Community. Zara Ingilizian, Head, Consumer Industries; Member of the Executive Committee, World Economic Forum, and Matt Moshiri, President of Verisk Maplecroft, summarising the paper on the World Economic Forum website, conclude:
“Failure to shift attention from the challenges of day-to-day commercial pressures to the ‘big picture’ will leave an enterprise excessively exposed to a range of longer-term risks. Therefore, rethinking corporate strategies to withstand rising uncertainty is a matter of urgency. Understanding where and why risks will emerge, and how they will impact strategies is core to building resilience.”
The report states that a vital step in this process is the adoption of horizon scanning, which leverages a combination of data and analytics, trend analysis, expert insight and ongoing risk assessments. This can give business leaders a strategic understanding of the intertwined external factors which could undermine their ability to effectively execute their strategies.
Verisk Maplecroft’s Industry Risk Analytics provides clients with the tools needed to build a nuanced and effective risk assessment framework. Download our How To Guide to learn more about how businesses can use the dataset to build resilience across their operations and supply chains.