Ken Lyon, Managing Director for Virtual Partners and
Advisory Board Member for Transport Intelligence led discussions on cyber and
catastrophic risks. Not surprising, attacks on information systems (IS) are on
the rise. Among the issues affecting this rise include the fact that most
systems are compromised by social engineering – when people share at a social
level issues or other information on their systems, it may alert hackers who in
turn use that information to hijack that system. The best way to reduce such
attacks is education. According to Mr. Lyon, educating users is more effective
than blocking websites. But perhaps one
of the key things companies should do is to at least implement basic methods of
risk management such as audits of information which should ensure a safe
operating system.
The next discussion dealt with catastrophic risks which can
include natural disasters and piracy. According to panelist, Chris Price, CEO,
Asia Pacific, Agility, while longer events can take up to six months to recover
from, the frequency of smaller events can be more detrimental. Jaya Moorthi of
APJ Logistics Director of Hewlett-Packard, Asia Pacific noted that 49% of
catastrophic events are in Asia plus the dynamics of next day delivery and
online ordering are adding a new range of risks. To reduce such risks, Mr.
Price suggested contingency planning, that is, looking at options, reviewing
strategic planning and trade- offs should be done. Ken Lyon noted that a good operating system
is also needed. Also, monitoring the supply chain will allow the company to see
where risks may pop up and what back up is needed.
To conclude the morning theme of supply chain risk, CEO of
Ti, John Manners-Bell presented an interesting presentation on security and
corruption followed by a panel discussion on the topic.
Defined by WEF corruption is “the widespread and deep rooted
abuse of entrusted power for private gain. Emerging markets offer enormous
opportunities, but also can also expose logistics companies to countries with
poor security, weak governance, inadequate judicial and legislative systems,
high levels of bureaucracy, high levels of trade barriers and endemic
corruption among government officials.
One of the reasons why the logistics industry is so
vulnerable to corruption is its close engagement with customs officials. In the
developing world, government employees are often poorly paid. For example,
Ralph Lauren was fined $882,000 for bribing customs in Argentina between 2004
and 2009.
Cross border activity in parts of West Africa is
characterized by the endemic payment of bribes and harassment. One of the
problems concerning trade with Nigeria is the length of its restricted goods
list, which prohibits or limits the importation of goods from neighboring
countries.
In India, drivers have to pay about Rs 250 per day in
bribes. A survey of truck drivers found that 95% reported paying bribes. This
high level of bribery is because of the large amounts of documentation that are
needed when crossing state borders. In fact, bribes make up a fifth of road
freight operators’ costs in India.The last day of the Emerging Markets conference concluded with good discussions on Asia-Pacific infrastructure and lastly Asia-Pacific ecommerce.
