Casualty Risk Trends: Food industry
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In the last century, many regions of the world transitioned from agricultural to industrial and service economies. Consequently, a large fraction of the global population no longer feeds itself, but relies on others for its supplies, leading to the emergence of global food supply chains. These supply chains involve countless partners and interfaces and require highly advanced logistics that are growing in complexity by the day. Coupled to these, there have been pronounced changes in food consumption habits in the last decades. For example, today an increasing number of consumers are motivated to seek out healthy food and beverage products intended not only to satisfy nutritional needs, but also to obtain an 'added benefit' which only in limited cases has been proven.
These developments do not come without risks. As a response, regulatory bodies in different geographies have been tightening food-related regulation and increasing control. In turn, these controls are likely to lead to increased food safety but also to an increased number of food recalls, as more stringent testing schemes will enhance the detection of food contaminants. Part of this changes are driven by consumers as they are more aware of the risks and better informed of their rights. On a similar token, technology as key enabling mean towards international trade will help mitigating some of these risks. For example, block chain solutions that allow real-time, full traceability of the supply chains, have the potential to not only improve food safety but also to improve value chain efficiencies, and to reduce food waste and food fraud.
In this report, Swiss Re's Casualty Risk Engineering Team analyzes the main questions related to current food industry challenges and explains what is important to bear in mind when insuring the risks, both from an insured's and insurer point of view.