Toxic mix of COVID, regulation and liability will put more emphasis on supply chain risk in 2022
The pandemic’s disruption to global supply chains has propelled the issue to the top of the board’s agenda – new legislation and a changing risk landscape will keep it there.
Supply chain problems generated by widespread and protracted lockdowns from COVID will continue to dominate the global economy through 2022. Distorted patterns of consumer demand and product supply will persist, exacerbated by environmental factors. training, including port backlogs and truck driver shortages. Meanwhile, cyberattacks on supply chains have quadrupled in 2021 and the combination of organizations’ ever-increasing dependence on digital systems and the growth of organized cybercrime into a sophisticated global enterprise to exploit them will ensure. the continuation of this trend. Cyber security will become an indispensable facet of supply chain protection.
Corporate boards will also need to focus on complying with a series of new supply chain regulations. In Germany, the Supply Chain Act comes into force in 2023, the result of a perceived lack of self-regulation by companies to prevent human rights violations by suppliers. Companies are now required by law to ensure that they and their suppliers respect human rights. Failure to do so could result in fines of up to two percent of the company’s average annual revenue.
Elsewhere, the EU’s plan for mandatory supply chain due diligence will gain momentum. The European Commission’s draft supply chain directive is expected to be adopted in January 2022 and transposed into the national law of the 27 EU member states within 24 months. This will see the creation of a liability regime under which companies can be held liable under national law for damages resulting from potential or actual negative effects on human rights, the environment or good governance. that they themselves, or companies that they control, have caused or contributed by their acts or omissions and provides compensation. Businesses don’t have time to waste preparing for the due diligence requirements they will face.