Terrorist attacks on the global supply chain on the rise

Terrorist attacks on global supply chains are at their highest rate ever, increasing 8.5 per cent last year, a new report reveals.

Published by BSI, the report – titled Terrorist Threats to International Trade and the Supply Chain – found that over the past 10 years, an average of 3.7 terrorist attacks have occurred each week, with a total of 346 attacks taking place last year across 33 countries.

Terror attacks on the supply chain include targeting oil infrastructure, hijacking, cargo theft, contraband smuggling, extortion and kidnapping schemes across air, rail, truck and sea transport or critical infrastructure.

According to the report, which is based on analysis conducted by BSI's SCREEN Intelligence programme that monitors supply chain security, terrorists have attacked the supply chain in 58 countries in the last decade, and have occurred at "alarming rates" in countries such as Colombia, India and Turkey where particular supply chains have routinely been targeted.

Islamic State is the leading group for supply chain terrorism and has been responsible for 6 per cent of all attacks in the past five years, the report found.

BSI notes that supply chain terrorist attacks are on the rise and warns of the "considerable direct and indirect economic costs", disruption to supply chains and reputational risks to organisations.

"The direct impact from acts of terrorism and indirect effects from terrorist organisations' exploitation of the supply chain have been, and will continue to be, critically felt across Europe," said David Fairnie, principal consultant, supply chain security at BSI. He added that the recent attacks in major European cities and against key transportation nodes have triggered heightened security levels and emergency border controls, which has had a significant commercial impact on businesses.

In the case of physical attacks on the supply chain, such as arson, bombings, or armed assaults, the result is direct disruption, as well as the destruction or loss of transported cargo, the report says.

Attacks on international cargo shipments have also occurred where the integrity of the load can be compromised or can lead to companies rerouting shipments, all with an added cost. For example, the report notes that terrorism related to the Syrian conflict forced Lebanese officials to reroute $1bn-worth of exports and resulted in the loss of $754m in revenue for the Jordanian trucking industry.

The report also points to the indirect costs of terrorist attacks on supply chains, such as increased security measures that disrupt typical cargo flows, which can slow the movement of freight and increase shipping costs. For example, following the Paris attack in November 2015, France imposed stricter controls along the borders with Belgium and Luxembourg, costing companies an additional $59 per delayed vehicle. The total cost to shippers in Belgium was estimated at $3.5m within the first month following the attack, the report says.

One trend picked up in the report was the wider range of industries and modes of transport that terrorists targeted in 2016 compared to other years. Increasingly, terrorists are targeting industries associated with private or corporate supply chains rather than state-owned supply chain infrastructure. Meanwhile attacks against the agriculture and food and beverage sectors has more than tripled over the past three years, with attacks on the industrial and manufacturing materials and pharmaceutical sectors more than doubling, and attacks against the metals industry has nearly doubled.

BSI is concerned that not enough investment is being pumped into supply chain security, which means impacts will continue to be felt. "The vulnerability of the international supply chain, including gaps in proper security measures, political instability, and corruption, exacerbates the threat posed by terrorist groups to international trade and the global economy," the report states.

"It is a common misconception that terrorism is strictly a national security issue and that counterterrorism is solely the responsibility of governments," said Jim Yarbrough, global intelligence programme manager at BSI. "However, our analysis clearly shows that commercial interests and private organisations are increasingly threatened, extorted, and directly targeted by terrorist organisations all over the world. Corporations must take notice and prepare their organisations accordingly."

The full report can be purchased here: https://www.bsi-intelligencecenter.com/#threat-analysis-report