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William Porter, head of international programs with Swiss Re Corporate Solutions, advises on how supply chains can mitigate risk and manage cross-border finance in the face of constant disruption.
Businesses today are broadening the discussion about risk management, especially relating to financial matters, to include the entire C-suite, Porter says. In the process, they’re becoming “hyper-focused on supply chain,” to acquire a better understanding of their overall resilience.
Beginning with COVID-19, companies began taking a larger view of their supply chains, and the possible ways they could be disrupted. That has included a fresh way of managing currencies in global markets. Today, Porter says, businesses are more likely to use a single currency for writing insurance policies and managing transactions across borders. And where local currencies are involved, there’s a push to minimize the time between issuance of an invoice and when it’s paid, as well as speed up the payment of claims to lessen the impact of currency fluctuations.
Often that preferred single currency is the U.S. dollar, notwithstanding doubts being voiced about its stability in a time of extreme economic uncertainty. The dollar is likely to continue serving as a reserve currency for the foreseeable future, Porter says, but risk professionals still need to have conversations about possible alternatives.
In looking for an insurance provider today, companies need to seek out long-term partners with a global footprint, Porter says. Previously, a large percentage of the global insurance market was between the U.S. and Europe, but with countries in Latin America and Asia emerging as manufacturing powerhouses, it becomes necessary to acquire broader expertise.
As the number and severity of supply chain disruptions increase, businesses are gravitating toward all-risk insurance policies covering multiple countries, Porter says.
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