Which of the following insurances would provide cover in the eventuality that your supplier's place of business flooded and this affected your deliveries?

Contingent Business Interruption Insurance (CBII) is specifically designed to protect a business from financial losses resulting from a disruption at the premises of a key supplier or customer. In this scenario, the insured's business is not directly damaged, but its operations (deliveries) are affected because its supplier's place of business has flooded. This is a contingent, or dependent, event, which is the precise risk that CBII is intended to cover. It indemnifies the policyholder for lost profits and extra expenses caused by the interruption at the third-party location.

A. business interruption insurance: This standard policy covers financial losses resulting from damage to the policyholder's own property, not a supplier's property. It would not apply in this scenario.
C. public liability insurance: This covers the policyholder's legal liability for causing injury to third parties or damage to their property. It is irrelevant to supply chain disruptions.
D. property insurance: This covers physical damage or loss to the policyholder's own assets (e.g., buildings, equipment, inventory). It does not cover consequential financial losses from external events.

1. CIPS (Chartered Institute of Procurement & Supply). (2018). Managing Contractual Risk (L5M2). CIPS Official Course Book. Profex Publishing. In discussions on risk mitigation

the text distinguishes between standard business interruption

which covers the insured's own premises

and specialist extensions like contingent business interruption

which are necessary to cover disruptions originating from key suppliers or customers (typically covered in sections on supply chain risk and insurance).

2. Chopra

S.

& Sodhi

M. S. (2004). Managing Risk to Avoid Supply-Chain Breakdown. MIT Sloan Management Review

46(1)

53–61. This article discusses supply chain risk mitigation strategies

highlighting that disruptions at a supplier's site require specific insurance coverage

such as contingent business interruption

as traditional policies are insufficient.

3. Jüttner

U.

Peck

H.

& Christopher

M. (2003). Supply chain risk management: outlining an agenda for future research. International Journal of Logistics: Research and Applications

6(4)

197-210. https://doi.org/10.1080/13675560310001622701. The paper explores sources of supply chain risk

including environmental risks like floods affecting suppliers. It implicitly supports the need for specialised financial instruments like CBII to mitigate the financial impact of such external disruptions

which fall outside the scope of standard property or business interruption policies.