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Executives: supply chain is greatest risk.

Breaks in the supply chain are the biggest risks threatening companies' revenue, according to 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, 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 issues.

The study also found that companies in North America and overseas are allocating more of their risk management budget to risk management than insurance, or risk transfer. In the United States, 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
Top Risks Affecting Companies' Top Revenue Driver

Property-Related America Overseas

Supply Chain 25% 19%
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%

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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Title Annotation:risk management
Author:Green, Meg
Publication:Best's Review
Geographic Code:1USA
Date:Nov 1, 2005
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