Based on data from Sphera Supply Chain Risk Management [formerly riskmethods], the chemicals industry is most at risk for disasters at business partner sites, a category of risk that includes fires and explosions. Of all the alerts sent to customers in 2018, this alert was most commonly sent to companies within the chemicals industry.
The Allianz Risk Barometer report consistently ranks fires and explosions as among the most-feared risks faced by businesses, and our data suggests that respondents aren’t wrong to think so.
Why are chemical industries affected by fires and explosions?
This is especially true in the chemicals industry, where a statistical analysis of the alerts sent to Sphera [formerly riskmethods] customers in 2018 shows a clear trend: The chemicals industry suffers most from fires and explosions that might affect their supply network.
The graph below breaks down the alerts Sphera [formerly riskmethods] sent about disasters at business partner sites by industry—and, as you can see, over a quarter of these alerts were sent to chemicals companies.
Examples of man-made fires and explosions in the past
The biggest explosions are ones that make the mainstream news—for example, the March 2019 blast at a Chinese chemical plant in Xiangshui County in Jiangsu Province was reported internationally in major outlets like The New York Times and others. But for every one explosion that makes international front pages, there are a lot of smaller ones that don’t. Did you hear about the fire at the Ems-Chemie’s production building in Domat/Ems, Switzerland? Alessa in Frankfurt? Dover Chemical in Ohio? What about the fire at ITC in Deer Park, TX?
All of these occurred in just the last few months—and unless you live in these regions, you probably didn’t read it in the news or see it on TV. But if one of these explosions is in your supply network, it doesn’t matter whether or not you heard about it—it can still have a very real, and very negative, effect on your company.
Assess and mitigate the risk of fires and explosions
You might think that there’s nothing you can do about fires or explosions that are going to disrupt your business. And, indeed, it’s true that you’re unlikely to prevent them. But this doesn’t mean that you can’t mitigate them. If you know about the incident as soon as possible, you can take fast action—for example, by making sure you understand how your company will be impacted, and then taking steps to circumvent it.
But don’t take our word for it—our customer Stockmeier can tell you themselves. When Sphera [formerly riskmethods] alerted them to an explosion at a facility in their supply chain, they couldn’t get in touch with the supplier. Just in case, they decided to import two strategic products from another provider. The next day, their supplier declared force majeure on all products that the chemical distributor bought from them, and prices in the industry started climbing. Because Stockmeier took immediate action after receiving the alert from Sphera [formerly riskmethods] and before the news was widely publicized, they realized a $300,000 purchasing advantage.
Whether you work in the chemicals industry or not, here’s the bottom line: Fires and explosions happen. But you can do something about it.
riskmethods was acquired by Sphera in October 2022. This content originally appeared on the riskmethods website and was slightly modified for sphera.com.