Terrorist Attacks Pose Growing Problem for Supply Chains Worldwide

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Terrorist attacks on supply chains are on the upswing, according to a recent report from BSI, a provider of supply chain intelligence.

The number of such attacks have increased 8.5% from last year, and the year-over-year increase in the proportion of terrorist attacks on supply chains versus all attacks has also risen, by 19%.

“The rate of direct attacks by terrorist organizations on the supply chain has been about three per week globally, when we look at the data over a 10-year period,” says Jim Yarbrough, BSI’s global intelligence program manager. “[In] the last two years, however, that rate has jumped to about six attacks per week.”

While terrorist attacks tend to saturate news headlines, they’ve in fact decreased in frequency worldwide for the second year in a row. This is not the case for supply chain- and trade-related attacks.

According to BSI analysis, supply chains in 58 countries have experienced terrorist attacks in the past decade. The range of industries targeted is also widening. “The oil and gas sector is most common sector to suffer from terrorist attacks,” says Yarbrough. “However, in recent years, we have seen dramatic increases in attacks on the agricultural and food sector and the industrial manufacturing sector.”

The biggest perpetrators of terrorist attacks on supply chains include the Baloch Republican Army in Pakistan, ISIS, the Revolutionary Forces of Colombia and the New People’s Army in the Philippines. Together, they account for nearly a quarter of attacks over the past five years.

Supply chain terrorist attacks in Iraq and Turkey have recently been happening more frequently, while rates have dropped for the Philippines, India and Colombia. Nigeria, in particular, has seen a staggering increase starting in early 2016, when the militant group Niger Delta Avengers began to attack oil facilities.

As Reuters reported, in February militants had used divers to carry out an underwater attack on Shell's Forcados pipeline. Subsequent attacks have caused Nigeria's daily crude oil production to drop by around 700,000 barrels, and it wasn't until this summer that the Forcados terminal finally resumed operations.

In this case, it was a direct disruption of the supply chain, motivated by the impoverishment and oil pollution that characterizes the Delta. Its inhabitants have not been able to partake in the oil wealth, and the Avengers sought to bring a larger share of the proceeds to the region.

According to BSI analysis, these “physical attacks against the supply chain, such as arsons, bombings and armed assaults, often result in the destruction of transported cargo.” The report cites the continued threats of terrorism associated with shipping through the Suez Canal, which accounts for 7% of global seaborne trade.

It’s difficult to determine the total supply chain costs that can be attributed to terrorist attacks. “We do know that, among the top 10 countries where these attacks occurred, there is over $770 billion worth of goods exported from those countries,” Yarbrough explains.

Companies should also keep in mind the indirect costs associated with terrorism threats. Increased security can mean more inspections and delays. Companies may also need to reroute, potentially increasing costs.

There’s no best way to eliminate these risk, but vigilance never hurts. “Threats to the supply chain are constantly evolving,” Yarbrough says, “Criminals and terrorists are always adapting to defeat the latest countermeasures. Organizations need to respond by constantly revisiting their security policies and procedures, and they should continuously perform risk assessments with their business partners and suppliers.”

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