What is the top risk for food and drink companies?
What is the top risk for food and drink companies? | Insurance Business America
Risk Management News
What is the top risk for food and drink companies?
Expert highlights evolving nature of risks across the industry
Risk Management News
By
Jonalyn Cueto
Business interruption is the leading internal risk for nearly half of food and drink companies, according to the 2024 Global Food and Beverage Risk Outlook published by WTW. The report, which surveyed 400 senior decision-makers in the sector, revealed that 48% of companies view business interruption as the primary threat to their success. Supply chain risk follows closely behind, cited by 40% of respondents.
The industry faces a turbulent environment marked by global instability, conflicts, climate change, and a cost-of-living crisis. This backdrop has made navigating potential disruptions the norm for many companies. Over 40% of surveyed companies identify increasing liquidity as a top strategic objective for the next two years, aiming to bolster their financial resilience. Other priorities include reducing costs (38%) and stabilizing the business (35%).
Rapid shifts in consumer preferences also pose a significant challenge, with 36% of companies expressing concern over keeping pace with these changes. However, this area also presents opportunities, as businesses adapt to new consumer trends. More than half (53%) see embracing sustainability and health and wellness as a leading opportunity, reflecting growing consumer interest in these areas.
Resilience building amid uncertainties
Despite the challenges, companies are proactively working to build resilience. Almost half (47%) review their business continuity plans every six months, while 31% do so quarterly. However, 29% of businesses report their insurance covers only property damage from extreme weather, with no provision for business interruption—a critical factor in recovery and resilience.
Simon Lusher, global food and beverage leader at WTW, emphasized the evolving nature of the risks.
“Many of the challenges food and beverage firms face today are of a different order from those they have overcome before,” he said. “Geopolitical instability, conflicts, and cost-of-living crises, alongside climate change, digitalization, and keeping up with the needs and wants of consumers, is getting harder in a fast-changing world.” He advises businesses to reassess their critical issues, areas of focus, and risk management strategies to prepare for various outcomes.
The survey highlights several findings, including:
Disruption concerns: Business interruption and supply chain issues are the top internal risks, with global instability heightening concerns about potential disruptions.
Growth opportunities: Sustainability and health and wellness are seen as major growth drivers, with 53% of companies identifying them as key opportunities.
Climate change risk: Climate change is a significant environmental threat, with 71% of businesses recognizing it as a top risk. The sector increasingly feels the impact of climate-related events such as floods and droughts.
Business resilience: There is a growing emphasis on enhancing business resilience, reflected in the frequent review of business continuity plans.
External challenges: Economic factors and geopolitical tensions complicate risk management strategies, cited by 52% and 48% of businesses respectively.
For the full report, visit the WTW website.
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