COVID-19 and climate change expose dangers of unstable supply chains
With the world undergoing its second “once in a generation” disruption in 12 years, a reappraisal of supply chains is in order. The COVID-19 pandemic has revealed how fragile lengthy, complex supply chains can be—and how much society has riding on their continued smooth functioning. In recent decades, global supply chains have evolved in ways that leave them more exposed to shocks. Some industries, including communication equipment, computers, and textiles, have grown two to three times more geographically concentrated since 2000.
Some 80 percent of world trade now flows through countries with declining political-stability scores, as measured by the World Bank. More global production happens in areas that are highly vulnerable to climate change. And the world has grown more interconnected: when disaster strikes in one region, flows of goods, finance, people, and data quickly transmit ripple effects far and wide. This article published by McKinsey explores these dangers.