Sarah Koo
Regional F&B Industry Leader, Asia
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Singapore
Extreme weather is disrupting food supply chains across markets in Asia. For instance, in China, a recent long drought affected over 4.76 million people and damaged hundreds of thousands of hectares of crops. And recently, tropical storms in the Philippines — the world’s biggest rice importer — led to severe crop destructions, over US$76 million in losses, and inevitable disruption to supply chains.
Despite the frequency of weather calamities, 31% of F&B businesses in the region have not performed qualitative or quantitative analysis on climate-related risks to their business, according to a Marsh survey. The survey also revealed that physical climate-risk preparedness in the industry is generally low.
It is not just extreme weather. Geopolitical tension has also brought about unexpected levies, creating a ripple effect of supply chain disruption and increased costs. Take a look at the Vietnamese seafood industry which has been grappling with a 20% levy imposed by the US. The levy led to significant trade disruption and increased costs.
So how can F&B manufacturers and wholesalers remain resilient amid volatility? Marsh Asia’s Regional F&B Industry Leader, Sarah Koo, shares her insights on building resilience holistically.
1. How are climate risks affecting the F&B industry? And what can manufacturers do to manage these risks besides insurance?
Sarah:
Unpredictable weather patterns are undermining crop yields, disrupting harvests, and driving up costs. These effects are being felt across supply chains, from farms to manufacturing lines, and can force manufacturers to change ingredients or suppliers at short notice.
Take palm oil: a widely used ingredient in processed foods. Due to heavy rains and floods, palm oil output in Malaysia — the world’s second-biggest grower — dropped by 17% in 2025, its biggest slump in nine years. Commodity shocks such as a palm oil slump drive input cost volatility across the food chain, forcing recipe changes and exposing vulnerable sites. To avoid the ripple effect of weather events and supply chain disruption, a key component for F&B manufacturers is the right insurance to protect against business interruptions.
While F&B insurance is a vital solution to mitigate against losses, a holistic risk management framework is key to building resilience. Businesses also need visibility, analytics and contingency planning to prioritise action.
For real-time location-based analysis of properties and estates, Marsh’s Blue[i] Property helps companies map exposure and prioritise mitigation.
2. How does geopolitical tension contribute to disrupted F&B supply chains?
Sarah:
Geopolitical shocks ripple through F&B supply chains with far-reaching effects. When conflicts led to distressed shipments of sunflower oil exports from Ukraine, several global food manufacturers had to quickly pivot to alternatives like rapeseed oil to keep production running.
One leading beverage and snacks company even reported a US$500 million hit due to write-offs in receivables and inventory amid the Russia-Ukraine dispute.
These shocks can compound with unexpected levies and inflation. Food manufacturers and retailers are forced to pay more for inputs such as raw materials, freight, and packaging costs. For example, when aluminium prices rise, the cost of canned goods increases and those costs are often passed to consumers.
F&B manufacturers and producers must not forget that diversifying suppliers and manufacturing locations is key. Businesses are now adopting multi-site production strategies, pre-qualifying alternate suppliers, and increasing storage capacity to avoid delays tied to trade disruptions.
Marsh data shows only 44% of Asia’s F&B companies have recently reviewed and updated their crisis management and communications plans. With recent product recalls inflicting large financial and reputational losses, a crisis management review can help to reveal gaps, speed recovery and materially reduce both financial damage and reputational fallout.
For instance, the Food and Drug Administration (FDA) in the US recently recalled shrimp products from an Indonesian company due to possible radioactive chemical contamination. When incidents like these occur, F&B companies implicated find it difficult to repair the financial and reputational damage, pointing to why crisis preparedness and appropriately-valued product recall insurance are essential.
To protect against cash-flow disruptions and trade challenges, trade credit insurance (TCI) can help F&B businesses protect receivables and improve liquidity.
3. Some of the biggest F&B players in the world are integrating AI software to manage their supply chains. Where does AI come in for F&B manufacturers?
Sarah:
Industry leaders are investing in AI to strengthen resilience, streamline inventory, optimise logistics, and enhance customer engagement. Global players like Nestle use AI-powered visual inspection to improve quality control while Coca-Cola leverages AI to predict consumer trends and refine its offerings.
In agriculture, smart farming and agri-robotics can help monitor conditions and support timely harvesting.
Supply chains in F&B are often long, and managing each component is tricky because of low visibility.
Potential business disruption risks along the F&B industry supply chain
Extreme Weather, Climate Changes, Crop Failure, Pestilences, Disease Outbreak Political Risks Trade Tensions |
Natural Catastrophes, Product Contamination Insolvency / Supplier Failures |
Cargo Shipment Interruptions Port Blockage Work Stoppage, Labour Disputes, Strikes, Riots |
Logistics Challenges, Delivery Failures, Delays Utilities Service Failure |
Packaging & Product Defects |
Pandemic, War, Geopolitical Tensions and Inflation |
To counter this challenge, Marsh’s Sentrisk platform supports AI-enabled supply chain resilience to increase visibility of the entire F&B supply chain. It maps suppliers, assesses disruption risks, and tracks ESG metrics, helping businesses simulate scenarios and plan mitigation strategies before disaster strikes.
4. F&B companies are facing increasing pressure to meet public, regulatory, and stakeholder expectations around sustainability and ESG. How should they ensure this remains top-of-mind alongside business resilience?
Sarah:
One quarter of the world’s greenhouse gas emissions comes from F&B and agriculture industries. This puts some F&B businesses under the spotlight on ESG efforts, as many markets in Asia are moving towards mandatory sustainability reporting.
To meet requirements, businesses must assess biodiversity, physical climate and transition risks. Marsh’s data shows that 35% of Asia F&B businesses still lack a complete Enterprise Risk Management (ERM) framework, which is a major obstacle to addressing climate and transition. Businesses need to incorporate ESG and sustainability into their ERM framework and make sustainability a core organisational value. Working with a risk adviser can help streamline ESG and ERM governance.
Measuring progress matters. Regularly tracking workplace, environmental, and governance metrics lets companies spot gaps, adapt to evolving regulation and demonstrate continuous improvement. All in all, robust ESG practices — underpinned by clear governance, metrics and risk management — help ensure growth, resilience, and responsibility go hand-in-hand.
Why Marsh
Marsh delivers an integrated approach, combining insurance, advisory and digital analytics to help F&B businesses boost resilience across climate, supply chains, and financial risk. With platforms like Blue[i] Property and Sentrisk, our clients gain insights needed to adapt and thrive amid ongoing uncertainty.