Multiclaimant damages following supply chain events and complex loss
Ironically, I was partially through writing about some of the unusual and unforeseen events that have taken place in the last few weeks when my monitor started to shake. As a colleague told me later, “I thought my boiler was about to explode”. As it happens, it was merely a 4.8 temblor earthquake that had occurred in the East Coast region of the United States, with its epicenter in White House Station, New Jersey. This occurred only a few days after a much more powerful and disruptive earthquake struck Eastern Taiwan.
Over the last several weeks, a number of other large-scale disruptive events have led to economic disruption and made prominent headlines. When I say large scale, I’m really referring to events which have a wide-reaching impact – a single or sequence of events that has an impact in many. As it happens, large scale can also obviously mean large from the perspective of financial impact too. It can go hand-in-hand.
These events have served as a reminder that while we may spend countless hours planning and establishing protocol and procedure, the unexpected does happen, and the ability to be flexible and responsive to the disruption is critical if companies want to minimize the impact. In fact, that’s often the point of planning. “What if …”.
Strange things can, and often do, happen. Risk mitigation must remain a high priority and consistent.
These large-scale events create disruptions at both a personal and a business level, often resulting in consequential loss of at various scales. From a commercial perspective, with unexpected disruption we are forced to respond – sometimes a well-tested planned response kicks in, other times we find ourselves in reactionary mode.
Financial impact
Financially, in disruptive situations we notice common themes such as – the importance of strong cash flow management, risk management and proactive supply change management. How effectively can a business respond and switch to Plan B to ensure business continuity? A business’ ability to be flexible and nimble is tested. Would the property damage or restoration be managed and financed? Is an alternate supplier available? Are co packers an option? Other transportation and logistics options? And while all that is being established or put in play, what are the financial consequences.
Examining how your business may be interrupted by large scale catastrophic events like this, and the financial consequences, is key to a risk management strategy. Understanding this in a proactive manner is considerably smarter than learning about it during a crisis.
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