Gallagher has warned of a widening protection gap as UK firms face sustained supply chain disruption driven by cost inflation, geopolitical tensions and cyber risk.
The broker’s report, Supply Chains, Redrawn: Lessons from Business Leaders Across Industries, draws on responses from company directors in seven countries and multiple sectors. It concludes that supply chain shocks have become a structural feature of the trading environment, while insurance protection has not kept pace.
Disruption worsening, cover lagging
In the UK, 29% of respondents said supply chain disruption has worsened over the past five years. Two-thirds cited rising material costs as the most common current risk. Tariff and trade disputes (53%) and geopolitical risks affecting trade flows and supply chain stability (42%) were the next biggest threats, followed by cyber threats (40%), export controls (40%) and labour disruptions (36%).
Underinsurance remains a clear issue. Among UK businesses that suffered supply chain losses in the past 12 months, just under half (46%) had insurance in place to fully cover those losses, compared with 32% globally.
Looking ahead, 19% of UK respondents expect supply chain disruption to worsen over the next five years. The rising cost of materials (23%) is seen as the main future driver, with geopolitical risks and tariff and trade disputes also expected to play a significant role.
Labour, supplier and cargo risks move up the agenda
Labour disruption is a growing concern, with 42% of UK business leaders expecting it to affect their supply chains in future. Executives also highlighted supplier consolidation and cargo theft as emerging areas of risk.
Companies are already reshaping their networks. In the UK, 68% of executives are investing in technology, including digital tools, AI and monitoring systems, to improve visibility and responsiveness. Most are also changing how they source: 64% are diversifying suppliers, 66% are exploring new or closer partnerships, and 61% are adopting onshoring, nearshoring or “friendshoring” strategies to reduce exposure to geopolitical shocks.
Cyber becomes a core supply chain concern
Cyber risk is increasingly viewed as a supply chain issue rather than a standalone technology problem. The UK’s National Cyber Security Centre has reported a sharp rise in “nationally significant” incidents, with major retailers, manufacturers and logistics providers among those targeted - underlining the vulnerability of operational and supplier networks.
Neil Hodgson (pictured), managing director of risk management at Gallagher, said supply chain disruption had significantly affected global business over the past year, with climate change, geopolitical conflict and a notable increase in cyberattacks all contributing. He noted that UK businesses were among those suffering substantial losses and that many remained critically underinsured, with less than half of affected firms having their supply chain losses fully covered.
Hodgson added that, with concern around further disruption still high, businesses should work with risk management advisers and brokers to close protection gaps, carry out tailored supply chain risk assessments and secure comprehensive risk management and insurance solutions.
