Supply chain risks are moving up the agenda of many corporates as concerns about potential geopolitical problems and counterparty risks grow.

Managing both the physical and financial supply chain was a key topic at the annual World Economic Forum (WEF) meeting in Davos, Switzerland last week, as delegates debated how companies can better cope with the unexpected, citing examples such as last year’s Japan nuclear crisis and the increasing level of piracy seen off the coast of Africa.

A study entitled “new models for addressing supply chain and transport risk” was launched at Davos, arguing that supply chain and transport disruptions were no longer just a concern for operational risk managers, but an issue that even company boards need to address.

The study revealed that more than 90% of those surveyed by WEF indicated that supply chain and transport risk management had become a greater priority in their organisation over the last five years.

Managing the financial supply chain has become a key priority for corporates, Jeremy Shaw, head of trade finance for Emea at JP Morgan tells GTR.

“Before the financial crisis, we were receiving one or two supply chain finance requests for proposals a month but that has now risen to one or two a week.”

With increasing economic uncertainty, corporate clients are increasingly wary of counterparty risk and are looking to supplier finance programmes to help ensure that their suppliers can finance themselves adequately as other forms of financing dry up.

Businesses are also becoming more cautious about which and how many banks they use to support their cash management and trade finance needs. They are looking to mitigate their concentration risk in their bank portfolio by either moving away from certain banks or increasing the variety of financial institutions they work with.

This is a potentially beneficial trend for banks with adequate liquidity and balance sheet to support new clients.

Shaw tells GTR that trade loans at JP Morgan went up by 73% to US$36.7bn in the final quarter of 2011, compared to the same quarter in the previous year.