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Aon warns on supply chain risk

The pursuit of corporate efficiency is leaving businesses badly exposed to supply chain risks, insurance broker Aon says.

Aon Australia's Divisional Manager Risk Solutions Mark Ronan says streamlining business operations through vertical integration, outsourcing and globalisation makes commercial sense, but many businesses are taking efficiency too far.

Mr Ronan says organisations with single supply arrangements were putting all their eggs in one basket. Although risks vary between businesses and markets, companies should investigate and remove any weak links in their supply chains.

"Basically, when corporate efficiency goes up, so too does supply chain risk. Supply chains have never been under as much pressure as they are now.

"Organisations are overestimating the resilience of their suppliers' operations. And as companies go overseas or outsource in search of efficiency gains, they inevitably increase risk."