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Looking back on COVID provides useful lessons

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The COVID-19 pandemic wreaked havoc on supply chains worldwide, causing delays and shortages due to restrictions.

The outbreak, though, also served as an unplanned stress test for operations everywhere, bringing to light many existing weaknesses and exposures, which were often exacerbated by the pandemic. 

“COVID was a circuit breaker,” said Kevin Bates, group head of risk and insurance for Australian construction company Lendlease Corp.

“COVID taught everyone a very strong lesson around secondary and tertiary supply chains. It forced people to think about what they’d been doing correctly and incorrectly and what they could do better. It forced a discussion,” said Mr. Bates, who is also a board member of the Risk & Insurance Management Society Inc.

COVID-19 presented an almost lethal cocktail of challenges to business operations. 

“Supply chain problems were prominent during the COVID-19 lockdown amid a perfect storm of causes, including shifts in demand, labor shortages and structural factors,” said Blanca Berruguete, Madrid-based global industry solutions director for construction at Allianz Global Corporate & Specialty. 

The pandemic made existing challenges worse. 

“COVID revealed a lot of supply chain issues,” said Dallas-based Cheri Hanes, who heads the subcontractor default insurance risk engineering team at Axa XL, a unit of Axa SA. The pandemic, she said, “uncovered and amplified exposures. It did not create them all.” 

Materials producers and fabricators ratcheted down production in response to declines in demand during the pandemic but may have miscalculated how quickly operations would return to normal, especially in the construction sector, said Andrea Blair, Nashville-based director of business resilience and continuity management services for Zurich Resilience Solutions, part of Zurich North America. 

Supply shortages continue but should ease during this year’s third quarter, she said.