OPERATIONAL RESILIENCE –TURNING THREATS INTO COMPETITIVE ADVANTAGE
Washington D.C. October 2nd 2014
TAPA AP Conference| HCM City | 06th October 2016
Robert Larson, Vice President
Head of Global Security,Operational Resilience and Health & Safety
DHL Global Forwarding, Freight
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Logistics is the Backbone of International Trade ….
Investing in mature and
emerging markets
Connecting Consumers,
Suppliers & Manufacturers
Taking cost out of value chain
Supporting the development of
world-class infrastructure
Securing the global supply chain
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.. .And Trade Volumes are Continuously Increasing
2020 (est.)1990
Eastern EuropeWestern
Europe
Canada
US
Middle East
Latin America
Africa
Japan
Asia-Pacific
2020 estimate
4.8%
8.8%
3.5%
9.8%
8.7%
17.5%
17.9%
4.0%25.1%
Latin America
Canada
JapanEastern Europe
Asia-Pacific
US
1990
Middle East
Africa
Western
Europe
6.4%
4.0%
13.1%
6.2%
7.0%
23.7%
23.3%
2.6%13.8%
50‒100 Mrd. USD
101‒500 Mrd. USD
>500 Mrd. USD
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Whereas Global Operational Risks are Increasing too
!1 Oxford research group Global responses to global threats Sustainable security for 21st century
Organized Crime
Terrorism
Failing States / Political Instability
Cyber-Attacks
Economic downturns
Climate change1
Competition over resources1
Marginalisation of the majority
world1
Global militarisation1
Increasing number of natural
disasters
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Supply Chain Risk and Business Interruption are the Major Risks01
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Why Resiliency Matters
Source: 1) Business Continuity Institute & Experton Group; 2) World Economic Forum Supply Chain and Transport Risk Survey 2011; 3) Jeff Dobbs, Global Sector Chair, Diversified Industrials and a
partner with KPMG in the U.S 4) Hendrick & Singhai, “The Effect of Supply Chain Disruptions on Long-Term Shareholder Value, Profitability and Share Price Volatility
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of companies had at least one
SC disruption in 2013 with
average disruption costs of 3
million Dollars1)
of the leaders of the worlds top
companies in the CEO summit
in 2012 are unprepared for
Supply Chain disruptions2)
81% 93%
TAPA AP Conference| HCM City | 06th October 2016
Incidents Can Affect Supply Chains Anytime & Anywhere
Source: Desk Research: News Agencies (CNN – Toyota May Lose 500,000 Vehicles of Output Post-Earthquake, Analyst Says, Business Week – Apple: The Fall of an American Icon, Chicago Tribune – Gm’s Strike Loss Grows USD 1.65Bn,
Rheinische Post - BMW stoppt Produktion in drei Werken ICIS-Japan disaster: BASF curbs production, closes plants; BDP international-Flooding Forces Shutdown of Chemical Plants in Thailand; BBC-Fuel strike begins to hit supply; Analyst Says,
Reuters - Thieves grab up to $75 million in Eli Lilly drugs; WIPRO – Supply Chain Vulnerability in Times of Disaster; MIT – Reducing the Risk of Supply Chain Disruptions); http://www.sabc.co.za/news/a/19037f8044ad98d49597fd3bfe17c0b1/
Numsa-strike-impacts-GM-production-20141007
2001CISCO had to write-down USD 2.2bn due to an inefficient inventory management only designed for high demand & big buffers.
2010ELI LILLY & CO lostdrugs worth USD 75mnin a single theft froma warehouse.
2010BMW halted production, losing 7,000 vehicles in a week after a volcanic ash cloud delayed delivery of vital electronic components.
2014SAMSUNG lost 40.000 electronic devices worth more than USD 6mn from a single cargo theft in a factory in Brazil.
2008Around 15% of SHELL’s sites in UK were impacted and some 112 out of 8,900 petrol stations were forced to close due to a labor strike.
1998GM lost over USD 2bn due tolabor strike that disrupted production in several US states.
2011TOYOTA produced 500.000less vehicles than planned and quarterly profit shrank 75% following the tsunami in Japan.
2013A strike by 220,000 members of the National Union of Metalworkers in South Africa resulted in a six day production stop for General Motors.
2011SHIN-ETSU CHEMICAL,and ASAHI KASEI experienced production outage in Thailand due to widespread floods across the country.
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A New Threatening Coalition – Cargo Theft Gangs And Drug Smugglers
Collaborate With Hackers
1044 kilos cocaine / 1099 kilos heroin
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AON terrorism risk map 2016
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Complex Risk Assessment due to Broader Spectrum of Potential Impacts
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Terrorist Attacks Globally on Transportation
Source: Aon’s 2010/2014 Terrorism Threat Map; National Center for Ecological Analysis and Synthesis; PwC Transportation & Logistics 2030, Volume 4: Securing the Supply Chain; International Maritime Bureau; Gateway Regions – very high cargo flow regions, Chokepoints – only one narrow way across a strait, valley or bridge e.g. Suez Canal
90 percent of the entire global trade flows through only 39 bottleneck regions.
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Natural Disasters have Increased by Around 10%
© 2015 Münchener Rückversicherungs-Gesellschaft, Geo Risks Research, NatCatSERVICE – As at January 2015
TAPA AP Conference| HCM City | 06th October 2016
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Are you Ready to Respond?
TAPA AP Conference| HCM City | 06th October 2016
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DHL Response – Integrated Security & Operational Resilience Program
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Over 100 full time Security & Ops
resilience professionals
Comprehensive program for
Security, Business continuity and
Health & Safety management
Site & lane assessments and
audit program
Innovations in technologies &
tools ( 360 Resilience)
Training program named „C-TPAT
best practice“ by US Customs
Border protection “CBP”
More than 60 TAPA-certified
sites worldwide
ISO 22301 BCM certification as
the first forwarder for more than
40 stations
Global Security Partnership program
with more than 30 carriers, ground
handlers and authorities
Secure Ocean Freight service Secure Railway service out of
China to Europe
High-value land
transportation service
TAPA AP Conference| HCM City | 06th October 2016
Innovation is Reciliency
Rates your supply chain risks
and resiliency, identifies risk
hot spots and recommends
suitable mitigations
Monitors your supply
chain in near real-time for
incidents, filters relevant
information and triggers
follow-up
24/7 Risk Control Towers
determines your impact on
business continuity, highlights
existing gaps and implements
efficient mitigation actions
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TAPA AP Conference| HCM City | 06th October 2016
Application for the Deutsche Post DHL Group
…collect and assess all relevant intelligence
• Type and time of incident
• Affected area / asset
• Impact on the Deutsche Post DHL Group
…disseminate relevant information to
stakeholders
• Draft and distribute quick assessment report
• Inform the Group’s Security Function
without delay
• Raise awareness of relevant management.
…perform trend analysis and forecasts
• Develop incident database
• Relate incidents to each other
• Develop trend graphs
• Predict future incidents / impacts
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The tool allows us to ….
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Business Continuity is a Management Process
Business Continuity Management involves
managing the recovery or continuation of
business activities in the event of business
disruptions
The Management process:
- identifies potential threats to the
organization and impacts to business
operations
- provides a framework for building
organizational resilience for an effective
response that safeguards, reputation,
brand and value-creating activities
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Requirements for a BCM program
Framework to be created based on specific
business related requirements.
Standard guides on logical steps for a solid BCM
system
Governance by Business Experts
Usage of Management Method
Plan, Do, Check and Act
Focused around the management of
facilities, staff and processes
Covers Business, Legal & Customer specific
requirements
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10 Step Approach
BCP’s
Provision of
Resource
IMT
Business Analysis
BIA Risk Assessment
Determining Choices
Determining BCP
Strategy
Testing and Exercising
Maintaining and Reviewing
1
2
9
3
4
5
6
7
8
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Country & Station has clearly displayed the BCM Policy and has communicated this to all employees locally
Station to create Business Continuity Plans (BCP‘s) for all possible risks that could affect
critical operations and the BCP‘s are to detail how to manage the incident and how it will
recover its activities
Country & Station has appointed a BCM nominee with appropriate seniority to be accountable for
implementing BCM
Station has ensured that it‘s BCP arrangements are reviewed and documented at
planned intervals
Station has identified activities (operations) that support its key products and services and its priorities
for recovery of critical activities
Station has completed a business impact analyse and has identified and documented the sites
threats
Station has formed a Incident Management Team (IMT) with deputies for all key functions
Station has determined how it will recover each critical activity within its recovery time
objective (RTO), including the resources required for resumption
Station IMT has successfully carried out 3 table top exercises in the past 12 months
and any lessons learnt have been incoporated into future plans
Using the Risk Assessment document the station has, for each of its critical activities
identified, available risk solutions
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BCM policy
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Outcome of an effective BCM Program
Key products & services are identified &
Protected
Incident management capability for
effective response
Improved understanding of self
(organization) its relation to others (other
industries, regulators, stake holders, local
authorities…..)
Trained staff to respond to incidents
Secured supply chain
Protection of reputation
Compliance to legal & regulatory
obligations
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Where we stand with our BCM Activities
The Americas region ISO 22301 certification have been successfully re-validated,
AP started with it’s certification process early this year whereas EU and MEA will
start later
ISO 22301
• Re-validation of ISO 22301 certification AM
• Kick-off AP BCM in April
• EU and MEA to confirm roll-out plan
• Pre-audits of identified hubs and stations
• Nomination of IMT‘s
• Conduct of BIA and risk assessments
Quantitatively Managed
• Process Measured and Controlled
• Regular Tabletop Exercise
• Executive Sponsorship
• Crisis management process
• Site compliance
• Governance model in-place
• Lead region certified
Defined Process
• Proactive
• Recovery requirements are clearly understood
• Business Continuity Program (BCP) in-place
• Comprehensive strategies andplans across business units
Managed Process
• Reactive
• Knowledgeable about disaster recovery
• Disaster response plans are documented for some businesses
• Emergency Management Strategy developed
Initial Phase
• "Fly by Seat of Plants"
• Process unpredictable,poorly defined, uncontrolled
• Poor change management between incidentand recovery
"Unfocused" “Best in Class""Mature""Capable""Aware"10 2 3 4 5
To
lera
nce t
o R
isk
High
Low
Status: 09/16
2012 2013 2015 2016
50% 75%
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Benefits of an Effective Security & Operational Resilience Program
Proactively identify the impacts on your operations
Effective response to disruptions and thefts in place
to minimize the impact
Ability to manage uninsurable risks
Encourages cross team working
Demonstrate credible response through
process of exercising
Enhance reputation
Competitive advantage; ability to deliver
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Conclusion
To sharpen your security and resiliency profile within the supply chain you should
Turn challenges into
opportunities
build a security & resiliency –aware culture
link security & ops resilience functions with
others
invest in a security & resilience
management system
measure your performance also by security
& resilience related KPI‘s
promote partnership within your supply
chain
make your ICT resilient
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Thank you for
your attention
Business must go on !