New trends, such as the sharing and recycling or reuse economy, advanced technologies, and shifting customer demands, are altering ways of working. As manufacturers develop business models that look to the next 10-20 years — encompassing not only the production and sale of products but also extending into service-enhanced offerings — how will these new trends influence the risk environment? And how are you planning for the challenges ahead?
Looking to the Future
Manufacturing covers a diverse range of products and sectors, so a number of business models can exist at any one time; despite this operational diversity, a number of trends and disruptors are exerting influence across all sectors.
Technology: new technology like robotics, additive manufacturing, advanced materials and the internet of things will offer cost savings, quality improvements, and increased flexibility, its adoption has significant implications for manufacturing processes and the shape of the future enterprise.
Data: the use of connected systems will result in efficiencies but also growing amounts of data. Products that have information about their origin; conditions of production and history of use; repair; and re-use will have increasing premium value.
Servitisation: increasingly manufacturers will move beyond production to marketing knowledge, expertise, and data. The notion of product ownership will also become increasingly decoupled from the use of products, as manufacturers look to the recycling economy to create new business streams.
Customers: the customisation of products will alter value as new markets, customer requirements, and stakeholders come to the fore.
Action to Take as the Risk Landscape Changes
For many organisations, the adoption of new technologies and new ways of working will involve breaking down traditional boundaries between intercompany departments and functions, making it essential for organisations to consider:
- How to identify new risks associated with the threats to not only tangible assets of the business, but also earnings, cash flow, and reputation.
- How to identify new risk associated with new opportunities presented by new products and the markets in which to sell them.
- Building an agile and resilient risk culture with comprehensive risk mitigation planning, scenario testing, and implementation. Fundamental to this is using data and insights to anticipate external events; responding consistently and efficiently regardless of location; and embedding learning across the organisation.
- Creating an organisational culture where cyber security has evolved to cover not just data breaches but technology-driven business interruption.
- Understanding the interaction between human factors, automated processes, and machine learning risks as new technologies introduce a step-change in workforce dynamics and manufacturing efficiencies.
- Building stronger partnerships and a trusted network of suppliers to understand, map, and plan for events.
- Create knowledge-sharing opportunities with customers, business partners, suppliers, and research bodies whilst also protecting intellectual property.
- The contractual positions of new technology or joint venture partners to map agreements, current coverages, and potential new and long-tail liabilities.
Having a full appreciation of new risks is essential, as this will force a challenge to previous decision-making processes in respect of insurance and risk management solutions to determine if they are fit for purpose in today's new operating environment.
