Research

Transportation Risk Index 2016: Navigating risk in the transportation sector

50 risks, split into five megatrends, ranked by 350 senior executives

September 28, 2016



The Transportation Risk Index analyses the severity of impact and ease of management of the top 50 risks facing the transportation industry. Grouped into five megatrends, we examine how these are impacting the sector currently and how this will change in the future.

The research is based on quantitative and qualitative interviews with some of the world’s leading transportation companies, revealing the key risks that will shape the industry over the next ten years.

Results

This report’s key themes weave a common thread: the risks that corporates face now and in the future are fundamentally different from the risks of yesterday.

Insights from the Index – and the reactions of the executives to its findings – have reinforced our opinion that those transportation companies who approach risk strategically open up a world of opportunity.

Below are some of the key conclusions from the research:

  • The biggest threat facing today’s transportation executives is cyber vulnerability. Technological developments from automation to the Internet of Things mean supply chains are more connected and reliant on technology than ever before
  • Managing this complex risk environment requires a community response; companies are only as strong as their weakest partner
  • Despite the primacy of cyber, the top risks are all closely ranked
  • Risks are inextricably connected which means the risk environment is increasingly complex. Therefore companies need an holistic approach to risk management
  • Proactive risk mitigation strategies remain important, but in a fast moving world of social media preparedness and response are just as critical to a company’s performance
  • Each region and sector views risk differently; there is no one size fits all response. This complex risk environment demands customised solutions

The Primary Risks

The industry's top threats as seen through the eyes of senior executives

The Primary Risks

The megatrends:

Geopolitical instability and regulatory uncertainty

Navigating a shifting social and political landscape is a constant challenge for transport executives. Terrorism, war, sanctions, protectionism, and fluctuating political allegiances and commercial alliances add risks. The regulatory response to these threats can prove just as disruptive.

Digital vulnerability and rapid technological advancement

The growing connectivity of the digital marketplace requires community solutions to risk. Very few, if any, companies remain fully in control of the effectiveness of their response in this area. As the pace of technological change continues to escalate, resilience is increasingly being built through communication, innovation and ensuring the corporate capability to respond to crises when they arise.

Changing market dynamics and business model insecurity

The pressure is rising on transport executives to build more dynamic business models that are capable of responding to an increasingly volatile global marketplace. Traditional disruptors such as fluctuating commodity prices and interest rates, the availability of competitive capital, emerging markets and fickle consumer demands are being joined by state-sponsored and non-traditional competitors, adding to industry insecurity about current business models.

Complex operating models in an interconnected world

Global supply chains – physical and digital - are interdependent by nature, exposing companies to the cascading consequences of risk. The never-ending search for growth often drives transport companies into volatile new markets and uneasy partnerships that expose even the most resilient firms to the vulnerability of third-parties.

Talent management and the complexities of a global workforce

As the Baby Boomer generation prepares to retire, companies across all modes of transport are facing skills shortages. With each sector being transformed by advances in technology, the focus of management is shifting away from finding enough people towards finding the right skillsets and building a workplace environment that will retain their most important people in an increasingly competitive marketplace.

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