Supply Chain Failure Ranks 7th in Aon Global Risk Management Survey

Insight from Russell Davis, from Aon South Africa’s property and motor broking centre - Since 2021, supply chain and distribution failures, ranked seventh in Aon’s Global Risk Management Survey, have emerged as a defining challenge for business leaders. A global pandemic, mounting geopolitical tensions and extreme weather events combined with shifts in trade policies have forced companies to reassess and revamp their critical supply chains.

It hasn’t always been like this. For decades, businesses around the world maximised efficiency and profit by spreading their production, minimising inventory and relying on just-in-time delivery. While profitable in stable times, these strategies can trap businesses in a web of interconnected risks in unpredictable times. Balancing efficiency with resilience is crucial for supply chains to withstand today's unpredictable disruptions.

Factors Sparking Supply Chain or Distribution Failure

Even a single day’s disruption can ripple through supply chains, causing shortages and delays across industries. Across Africa, several recurring risks continue to test the resilience of logistics and supply chain networks.

• Extreme Weather and Natural Catastrophes - Cyclone Freddy^[1] in 2024 devastated parts of Mozambique and Malawi, damaging roads, ports and power lines, and disrupting regional fuel and food deliveries. In KwaZulu-Natal, severe flooding repeatedly damaged the N3 and port infrastructure, delaying exports and highlighting the growing cost of climate-linked disruptions.
• Collapse of Key Infrastructure - Africa’s limited transport alternatives make infrastructure failures particularly costly. Port congestions in South Africa’s ports is a growing concern causing higher costs for goods and slower operations for industries that depend on fast imports and exports^[2].
• Shortages and Strikes - Labour unrest continues to challenge supply stability. Port and rail worker strikes in South Africa in 2023 and 2024^[3] cost the economy millions daily, while truck driver protests have blocked major highways. Strikes in Zambia and the DRC’s mining sectors^[4] have also disrupted the global supply of critical minerals.
• Commodity and Logistics Shortages - Fuel and material shortages remain a chronic risk. Diesel supply issues in South Africa, tied to refinery closures and transport bottlenecks, have hindered food and mining operations.^[5] In Kenya and Ghana, foreign exchange and logistics constraints have caused fuel and fertiliser shortages, while pharmaceutical imports remain vulnerable to global supply delays.

An Emerging and Accelerating Risk

Supply chain disruptions are increasingly diverse, extending beyond physical damage events to affect supply availability and costs. Insolvency cases are rising in sectors such as transportation and logistics, while systemic cyber events can disable supplier channels and critical infrastructure. Critical Equipment failure such as equipment (vessels, boilers, transformers) and spares (bearings, gears, transmissions) can cause major interruption to a supply chain If these critical elements fail or are damaged and the necessary replacements are not on hand. In addition, human rights violations are often concealed within international supply chains, all of which converge to pose significant environmental, social and governance risks for organisations to manage.

Organisations often focus on their largest suppliers, but a single small supplier or a niche component can expose a disproportionate vulnerability. In one example, Hurricane Helene halted activities at a small mine in North Carolina that supplies 70 to 90 percent of high-purity quartz — a key semiconductor input.^[6]

Losses and Preparedness

Despite nearly two-thirds of respondents in Aon’s Global Risk Management Survey indicating that they feel prepared for a supply chain or distribution failure, the risk continues to materialise in practice, with often crippling repercussions. Over a quarter of organisations reported direct losses in the past year - a clear signal that preparedness does not always translate into resilience.

• 28% of respondents suffered a loss related to supply chain or distribution failure in the 12 months prior to the survey.
• 61% stated their organisations have formal response plans in place.

These figures highlight a critical gap between planning and execution - one that underscores the need for deeper insight, better measurement and more agile response frameworks. Building resilient supply chains starts with visibility, data and collaboration. Organisations that can map their vulnerabilities and quantify their exposures are better positioned to recover quickly and compete effectively.

Profiling and Quantification is Key to Mitigating Supply Chain Risk

It is important for organisations to apply a risk lens when considering which suppliers are most critical – and focusing too narrowly on supplier relationships with the most significant spend increases the risk that single points of failure may be overlooked.

Aon provides a 5-point plan of how to approach the process of profiling and quantification:

• Enhance Transparency and Visibility - Advanced analytics and predictive risk intelligence are vital for real-time monitoring and early warning of disruptions. It enables organisations to identify weak points, model potential impacts and strengthen the resilience of networks.
• Quantify and Manage Financial Exposure - Data-driven risk modelling helps forecast potential losses, prioritise critical contracts and suppliers, while guiding investment in mitigation measures. Yet only 12% of survey respondents have quantified their supply chain risk, which is a concerning gap. Without understanding the exposure, it’s impossible to make informed risk management decisions.
• Balance Efficiency with Flexibility and Resilience - While operational efficiency remains important, supply chains must also be designed for adaptability. This may include diversifying supplier bases, re-engineering logistics routes and investing in digital tools that allow rapid pivots when disruptions occur.
• Invest in Innovation and Workforce Capability - True resilience depends on people as much as technology. Building teams skilled in data analytics, automation and AI — and combining that with strategic risk management expertise — is essential for navigating today’s complex trade environment.
• Prioritise Enterprise-Wide Collaboration - Breaking down silos across business units allows for shared data, unified risk assessments and coordinated responses. When everyone operates from the same information base, decisions are faster, clearer and more aligned to enterprise goals.

As organisations navigate an era of heightened volatility, they must rethink their approach - prioritising resilience, transparency and adaptability as well as efficiency. The stakes are high: Supply chain resilience has become a core determinant of business continuity, competitiveness and long-term success.

Disclaimer

The contents hereof should not be construed as legal advice on any matter. You should not act or refrain from acting on the basis of any content included in this communication without seeking professional legal counsel. This communication does not constitute or create a lawyer-client relationship between us.

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^[1] https://disasterphilanthropy.org/disasters/tropical-cyclone-freddy/

^[2] https://covenantlogistics.co.za/south-african-ports-congestion/

^[3] https://allafrica.com/view/group/main/main/id/00083655.html

^[4] https://raid-uk.org/congolese-workers-challenge-mining-companies-in-drc-courts

^[5] https://www.engineeringnews.co.za/article/economic-and-regulatory-constraints-are-putting-south-africas-fuel-supply-at-risk-2025-08-22-1

^[6] https://www.z2data.com/insights/quartz-mine-disruption-in-spruce-pine-nc-threatens-semiconductor-manufacturing