Global supply chains are facing pressure from every direction. And while insurance has long been the default tool for managing multiple types of risks, it’s no longer enough.
Rising raw material costs, inflation and new tariffs are contributing to higher premiums, stricter underwriting standards and tighter policy terms. In this environment, companies that present as higher risk may face limited coverage options or unaffordable terms.
That’s why businesses can’t afford to treat insurance as their only line of defense. Increasingly, the most resilient organizations aren’t the ones with the most coverage — they’re those with the best risk-management program. That means taking proactive steps to reduce risk exposure, protect operations and strengthen the case for insurability in the eyes of underwriters.
This mindset is especially critical for companies whose supply chains span multiple regions, rely on time-sensitive delivery models or depend on third-party partners for logistics, warehousing or raw materials. A single breakdown in that network can trigger ripple effects across production schedules, customer delivery and revenue.
How can companies strengthen resilience and improve their insurability in today’s environment? It starts with rethinking how supply chains are built, protected and financed — from the inside out.
Efficiency strategies like lean manufacturing and just-in-time inventory have long helped manufacturers reduce storage costs, free up cash and keep operations tightly focused. But when disruption is the baseline, those same strategies can quickly become vulnerabilities. Minimal buffer inventory and heavily streamlined supplier networks allow even short delays or material shortages to halt production.
True resiliency is built through structural flexibility that absorbs shocks, adapts quickly and allows the company to recover faster. That means reengineering supply chains not just for speed and cost savings, but for durability and optionality. Following are some tips for building flexibility into your supply chain.
Expand your sourcing network. Relying on a single region or vendor, especially in areas of vulnerabilities to geopolitical tension or climate risk, creates outsized exposure. Instead, diversify geographies, suppliers and transportation modes.
Hold strategic inventory for critical components. While additional inventory may increase initial costs, the price of a production stoppage is often much greater and introduces significantly more risk.
Understand your full supplier ecosystem. Disruptions often occur beyond the suppliers you’re directly in contact with. Your Tier 1 supplier may be solid, but if a Tier 2 supplier faces a labor strike or raw material shortage, it could delay production. Preemptively get assurances on their contingency plans and make your own accordingly.
Break down internal silos. Cross-functional collaboration between procurement, legal, finance, operations and risk teams ensures that contracts, contingency plans and insurance coverage align.
Supply chain vulnerabilities have become the top cyber risk, with 54% of large organizations identifying it as their biggest barrier to achieving cyber resilience. Even if their own defenses are solid, a weak link in a vendor’s network can expose the entire operation to attack. And when those attacks succeed, the impact isn’t just digital — it’s operational.
A ransomware hit on a freight platform, a breach in a shared invoice system or a phishing scheme targeting your suppliers can halt shipments, delay production and damage customer relationships. The more that companies rely on third-party vendors and connected devices, the more they become exposed to vulnerabilities they don’t directly control.
Here’s how to reduce cyber risk across your supply chain:
Vet your third parties. Require all suppliers, logistics partners, and software vendors to meet baseline cybersecurity standards and carry cyber liability insurance.
Educate your staff. Many breaches originate from phishing, social engineering or payment fraud, which expose vulnerabilities in human error. Regular training can strengthen your human firewall.
Limit and oversee access. No one outside, or even inside your organization should automatically be trusted to access systems or data without verification. Every user should be required to verify their identify and permissions continually.
Develop and test response plans. Responding to a breach isn’t just an IT function. Include legal, operations, communications and insurance stakeholders in simulations. Everyone should know their role and impact.
Even the best supply chain strategies can’t eliminate risk, and not all risks can (or should) be transferred to insurance. Political instability, catastrophic weather events and cyber-driven downtime can fall outside traditional policies or come with costly exclusions. Even covered events may come with rising premiums, higher deductibles and reduced limits.
Financially resilient companies don’t wait for insurance markets to define their options. They take a proactive approach, supplementing traditional coverage with flexible strategies designed to absorb disruption and maintain control when volatility hits. That includes:
Captives and self-insurance. Whether it’s rising property costs, cyber exposure or contingent business interruption, captives give you more control over underwriting, claims and capital. They’re especially valuable when coverage is limited, or premiums are increasing faster than losses.
Parametric insurance. These policies pay out based on predefined events, such as a port closure, flood level or temperature threshold, rather than waiting on drawn-out damage assessments. For supply chains tied to specific high-repeat geographies or weather-sensitive products, this speed and certainty can make all the difference.
Smarter risk allocation. Too often, companies are underinsured simply because their coverage limits or valuations haven’t kept pace with inflation or extended recovery times. Reassessing values and modeling higher retention levels can help balance risk financing decisions. This ensures the business is covered by traditional policies where it counts and self-funding where it makes more sense.
Supply chain resilience is earned through the choices you make long before disruption hits. The most successful organizations — and the most insurable ones — aren’t just reacting to the world’s volatility. They’re building, protecting and financing smarter to take and maintain control from the start.
Jeff Lang is president, retail property and casualty with Venbrook.