Treasury & Risk Magazine

But there is some help out there for those trying to get a start in developing a risk management process for China. “There is so much demand for product quality monitoring from our clients sourcing in China and other developing countries,” says Gary Lynch, global leader in the supply chain management practice at New York-based insurance broker Marsh. To meet the need, Marsh recently unveiled a supply chain monitoring and mapping service that assesses product quality, logistical networks, technology, the labor infrastructure and potential political pitfalls.

Insurance also provides risk transfer for many supply chain risks, but it is not a panacea. While global property insurance policies offer contingent business interruption coverage for both non-owned and owned locations in China, in case they’re shut down by natural disasters, the devil is in the details. “Risks like a labor strike that closes down a factory might not be covered,” explains Bob Howe, who runs Marsh’s global property risk practice. “You might also need to get a different insurance policy to cover inferior quality products. Bear in mind most property policies will not necessarily cover the suppliers of suppliers, although some insurers are willing to negotiate on the subject.”

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