Willis Towers Watson - Transportation Risk Index

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7 Executive summary 7 data highlight the disparities that continue to make global solutions so elusive for multinational transport providers. In general, the prolonged economic struggles of most shipping lines have made the maritime sector more sensitive to risk than other modes of transport: its top four individual risks are all rated above the air sector's top risk. Maritime transport providers perceive cyber-threats and data privacy breaches to be their top risks. For aviation, failure of critical IT systems is the biggest concern. However, all transport sectors in all regions share concern about another product of globalization: the growing reliance on third-parties for everything from quality assurance and contract delivery to cyber resilience and the maintenance of corporate reputations. Nowhere has this risk been more clearly illustrated than with the recent bankruptcy of South Korea's Hanjin Shipping. Its demise is a case study of the transport industry's interdependence - impacting on alliance partners, ship lessors, port operators, freight forwarders, insurers and cargo owners - stranding more than $14 billion in goods at sea. The single biggest individual threat across all modes of transport is the potential for cyber and data privacy breaches. Dissenters from that view argue that cyber-risk fears are fuelled by an alarmist media environment where discussion is dominated by hacking horror stories, ill-intentioned insiders and suggestions that the critical systems of most top corporations have already been compromised (the owners just don't know yet). But there is no denying that the skillsets of the digital threat actors are growing, just as the transport industry's increased reliance on third-parties is multiplying the potential points of entry. Clearly, an increasingly connected world requires a community response to many risks. No company, no matter how vigilant, is an island. *combined risk score (severity of impact × ease of risk management) Increased security threat from cyber and data privacy breaches 1 Dependence on third-party suppliers 3 Competition/anti-trust law scrutiny associated with M&A activity 5 Inability to keep up with pace of change and technological advancement 7 Over-dependence on national infrastructure 9 Failure of critical IT systems 2 Third-party security vulnerability and digital supply chain resilience 4 Increased complexity of regulation 6 Threat from new and emerging competitors 8 New technologies obsolescing existing transport infrastructure 10 Fig. 2 | Top ten risks across the transportation sector 44.1 41.5 42.7 41.4 40.5 40.1 40 40 37.6 37.2 8 6 4 2 9 7 5 3 1 10 Top two risks: LAND Increased complexity of regulation 2 4 5. 3 * 1 Increased security threat from cyber and data privacy breaches 47.6 * 1 Top two risks: SEA Globalization of customer base 1 Increased security threat from cyber and data privacy breaches 49.1 * 1 2 47. 8 * There's always been a risk that somebody might sabotage your business or vandalize it… [but now, they] can do those things from the other side of the world without having to expose themselves to much personal risk —James Hatch, director, cyber services, BAE Systems Applied Intelligence

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