Executives: supply chain is greatest risk.Breaks in the supply chain are the biggest risks threatening companies' revenue, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. a survey of financial executives. The survey found one in four of the financial executives surveyed cited supply chain risk as being a top threat to their companies' top revenue driver. Other top concerns included mechanical/electrical breakdown breakdown /break·down/ (brak´doun) 1. the act or process of ceasing to function. 2. an often sudden collapse in health. 3. loss of self-control. , 12%; natural disaster, 8%; and fire or explosion, 6%. Of the risks that executives identified, 65% were property related, and 32% were not, including labor issues, pricing fluctuations and governmental or regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. issues. The study also found that companies in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. and overseas are allocating more of their risk management budget to risk management than insurance, or risk transfer. In the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , 56% of the risk management budget is spent on risk control vs. 44% on risk transfer. Overseas, companies are spending 58% of their risk management budget on risk control vs. 42% on risk transfer. The study, by FM Global, included input from 600 financial executives, including chief financial officers and treasurers, with the majority of them working for companies with $1 billion or more in annual revenues. The study, "Managing Business Risk in 2006 and Beyond," is available online at www.protectingvalue.com.
Top Risks Affecting Companies' Top Revenue Driver
North
Property-Related America Overseas
Supply Chain 25% 19%
Mechanical/Electrical
Breakdown 12 3
Natural Disaster 8 4
Fire/Explosion 6 7
Terrorism/Sabotage 5 1
IT/Telcom Systems 5 9
Production 2 8
Miscellaneous 2 --
Total Property-Related 65% 51%
North
Non-Property Related America Overseas
Labor Issues 8% 10%
Pricing Fluctuations 6 14
Regulatory 5 4
Employee Malfeasance 4 9
Legal 1 --
Miscellaneous 8 8
Total Non-Property Related 32% 45%
Not Sure 3% 4%
Source: FM Global
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