Nearly half (48%) of food and beverage companies view business interruption as their primary internal risk, with supply chain disruptions following closely behind at 40%, according to the 2024 Global Food and Beverage Risk Outlook from WTW.
The report highlights the critical role of insurance in mitigating these risks.
Amidst global instability, conflicts, climate change, and economic challenges, the sector faces ongoing disruptions.
As a result, over 41% of companies are prioritising liquidity increases to navigate future shocks. Additional strategic goals include reducing costs (38%) and stabilising operations (35%).
One notable finding is that 29% of businesses report their insurance policies cover only property damage from extreme weather, excluding business interruption. This gap leaves companies vulnerable to significant operational and financial setbacks.
Ian Poustie, food and beverage industry lead, Australasia at WTW, emphasised the importance of comprehensive insurance coverage for resilience.
“The food and agriculture industry is one of the most important sectors in Australia and contributes significantly to the country’s economic growth. It has an international reputation for producing safe, high-quality products and is a strong exporter of products across various categories to global markets. However, the industry is exposed to a widening range of disruptive forces, from droughts and natural disasters to trade disputes and regulatory changes, as well as perennial risks such as product recalls, factory, and warehouse fires,” he said. “Many of the challenges food and beverage firms face today are of a different order from those they have overcome before. Our findings reveal that escalating external threats are heightening instability risks across companies, spanning from political, climate, climatic, cyber, and workforce domains.”
Despite these challenges, the report indicated that companies are taking steps to enhance their resilience.
Nearly half (47%) of food and beverage businesses review their business continuity plans every six months, while 31% do so quarterly. Furthermore, 36% of companies express concerns about keeping pace with changing consumer tastes, which presents both risks and opportunities.
More than half of the surveyed companies (53%) identify sustainability and health and wellness as significant opportunities.
Compared to 2022, there is a shift from enthusiasm for plant-based meat substitutes toward a focus on gut health, nutrition, and sustainable production.
WTW’s Global Food and Beverage Risk Report 2024 surveyed 400 senior decision-makers in risk management within leading food and beverage companies worldwide, including the Asia-Pacific region, in January 2024.
