NU Online News Service, Dec. 5, 1:53 p.m.EST

After the March 11 earthquake and tsunami in Japan, majorcompanies are beginning to examine risk-management strategies fortheir supply chains in China, as that country is exposed to many ofthe same natural-catastrophe risks as Japan and is a largersupply-chain hub for many companies, according to a new FM Globalstudy.

Based on a survey of 100 financial executives from large globalNorth America-based corporations with over $1 billion in sales, FMglobal found that 86 percent of respondents are reliant on China aspart of their supply chain for key product lines compared to Japan.Forty-six percent were reliant on Japan.

Ninety-four percent of respondents say they are concerned aboutnatural disaster-related disruptions to their supply chains inChina. Before the Japan earthquake, 61 percent said they were“somewhat” to “extremely” concerned about supply-chain disruptionsin China.

FM Global says, “The increased supply-chain risk exposure inChina underscores the need to look at supply-chain resiliencybeyond just certain risk-management tactics and geography. Itshould be more fundamental and strategic.”

The study recommends that organizations:

• Examine how they can mitigate risk within their products andprocesses.
• Assess how well they collaborate with suppliers to mitigaterisk.
• Have appropriate business-continuity and disaster-recoveryplans for supply-chain disruptions in emerging markets such asChina.

FM Global notes that China has not yet fully embraced many ofthe risk-management practices seen in Western nations.

According to the survey, 61 percent of companies are consideringimplementing a more robust risk-assessment process to mitigate theimpact of a natural-disaster disruption in China. Additionally, 65percent are considering increasing collaboration with suppliers onmitigating risk at their locations and 70 percent of companiesreliant on china for their supply chain are considering “increasingalternative sourcing” to mitigate the hazard.