A global telecoms network equipment manufacturer was keen to identify its internal and external suppliers’ exposure to business interruption risks. The manufacturer needed detailed exposure data to help inform its risk management decisions and direct its thinking about insurance limits.
The business has huge annual investments in R&D to produce the Application-Specific Integrated Circuits (ASICs) and software used to run its equipment. This technology is the lifeblood of the business and the ‘brains’ behind the products.
Consequently, the business holds many patents to protect its intellectual property. It relies heavily on outsourcing, particularly for chipset production. It also buys third-party patented ASICs that work with its products.
The business has many owned production facilities plus a range of Electronics Manufacturing Services (EMS) providers. This diverse supply created the need for a detailed supply chain exposure assessment.
The business’s risk management team used SCAIR® to create a detailed view of its end-to-end supply chain by mapping products and product groups to critical locations and supply points.
SCAIR® then helped them quantify the accumulated exposure of their business’s portfolio of products for every crucial supply point. The team entered the pertinent business interruption data to produce the calculations and reporting. Some of this data was discovered through detailed enquiries, whilst some was a best estimate and subject to change as better information became available.
The quantification then resulted in individual loss estimates for each supply point. These loss assessments modelled the financial impact of a supply interruption and took into account not just lost profits but also the impact of losses in market share.
SCAIR® flexibility allowed for changes in the data and to generate instant updates to the loss estimates.
The business gained a much better knowledge of the interruption exposures it faced. When discussing the subject with senior management, the team had all the information at their fingertips and were able to model and show where risk management improvements would have the best effect on reducing the potential impact of business interruptions.
This crucial data has driven specific projects to mitigate risks to realigned target loss estimates as set by the senior management group.
