New research from Proxima shows that most UK-based CEOs believe they would put up to a fifth of their revenue at risk if their top three suppliers faced a two-week disruption.
Alongside this, over four in ten (42%) of those surveyed in the UK said 21%-40% of revenue would be in jeopardy should their top three suppliers face disruption, the highest percentage of all markets surveyed.
Paying a premium for resilience
Proxima’s Global Supply Chain Resilience Outlook, based on a survey of over 500 global CEOs at businesses generating over $500m in annual revenue, also found that the 100 UK-based CEOs would accept an average uplift of 17% on their current third-party supplier costs to guarantee supply chain resilience. The clear majority would accept an uplift of 11% or more.
When asked how they might fund such an uplift in their third-party supplier costs, 43% of UK-based CEOs indicted they would pass price rises on to customers. Equally, just three in ten (30%) would implement cost saving measures, the lowest percentage of all markets.
Over a quarter (27%) said they would absorb the costs through reduced margins.
A varied threat landscape
When asked which threat currently poses the greatest financial challenge to their supply chain, over a quarter of UK-based CEOs cited climate change and extreme weather events. Respondents then identified protectionist policies (21%), followed by conflict and geopolitical tensions (19%) and sustainability targets and regulatory requirements (17%).
The research also finds that protectionist policies and geopolitical tensions are threats that UK-based CEOs believe their peers underestimate most.
The cyber risk preparedness gap
The majority said their business had experienced a supply chain disruption caused by a cyber incident in the past 24 months. 45% agreed significant business revenue would be at risk within their organisation if a key supplier fell victim to a cyber attack.
Despite this, the data finds that the majority of UK-based CEOs do not have real-time visibility on cyber risk. Less than half (45%) have conducted a full cyber resilience stress-test across critical suppliers in the past 12 months. Meanwhile, just over a third believe their business has real-time visibility into the cyber risk exposure of its critical suppliers.
Simon Geale, Executive Vice President at Proxima, said, “At a time when the resilience of global supply chains is being tested like never before, our data shows that UK businesses are in the eye of the storm. As UK-based CEOs contend with an increasingly varied threat landscape which threatens to harm their revenues, it is no surprise that many are willing to pay more to reduce their risk.
“There are, however, no easy solutions. Awareness of vulnerabilities is one thing, but having a comprehensive risk mitigation strategy in place is quite another. Cybersecurity is a clear example of this. Our data uncovered a clear gap between awareness of the threat and tangible action among UK businesses.
“Looking ahead, it is crucial that supply chain resilience becomes a board-level decision across UK businesses of all sizes. Without clear visibility over their risk posture and vulnerabilities, businesses will be ill-prepared to counter the challenges that global volatility throws at their supply chains.”
