For a business, a physical damage event – such as a flood or a fire – can cause operational downtime and potential business interruption (BI) losses. Physical damage at a covered third-party location, such as a supplier, may trigger contingent business interruption (CBI) cover, depending on policy wording.
However, the duration of recovery can also be affected by broader supply chain conditions not necessarily insured on a standalone basis. For instance, infrastructure failures, logistics bottlenecks, shipping delays or trade restrictions may delay repairs, replacement equipment or inputs, thereby compounding the severity of an insured BI or CBI event.
An analysis of public corporate disclosures from Swiss Re reveals that many BI and CBI exposures remain unmapped and potentially underestimated.
Key takeaways:
· 43% of Fortune 500 European companies report conducting physical risk assessments of their own facilities. Dependencies on critical suppliers, utilities, logistics networks and digital infrastructure can be even less visible: just 7% of analyzed companies report extending that scrutiny to their suppliers' facilities. Only one in six of those assessing their own operations report looking upstream. Consequently, many risks may remain unidentified until a disruption occurs. And, less than 2% of companies report assessing the wider infrastructure they depend on.
· Chemicals sector leads across multiple dimensions, with 86% of companies acknowledging extreme weather vulnerability and 57% identifying concrete mitigation measures. Motor vehicles and parts (19%) and industrials (16%) lead in supplier facility assessments, likely reflecting lessons from events.
· Taiwan is the global epicenter of semiconductor manufacturing, making its hubs critical nodes in technology supply chains. These facilities face converging climate risks: in 2021, Taiwan's worst drought since 1964 forced a 15% reduction in water supply to major manufacturing hubs. In July 2025, parts of southern Taiwan received over a year's worth of rainfall in a single week, flooding facilities including TSMC's Chiayi plant. Swiss Re's flood models show that many areas in the Southern Taiwan Science Park lie within flood zones, with flood losses at key semiconductor manufacturing hubs projected to increase by 4% by 2030 and 36% by 2050 under the middle-of-the-road climate change scenario.
· Heatwave days are also projected to increase from approximately four to five per year to 52 to 68 per year by 2050 for these same locations, potentially compromising cooling systems critical to semiconductor production.
· Many companies still lack the supplier, infrastructure and logistics data needed to assess these risks fully.
