Single point of failure

In 2021, the grounding of the container ship Ever Given in the Suez Canal blocked traffic on the important route for nearly a week. That single point of failure caused ripple effects which impacted global supply chains for months after. Last week, a flawed software update issued by the cybersecurity company CrowdStrike, shut down computer systems around the world leading to grounded airplanes and cancelled surgical procedures. Events like these highlight the fragility of our highly efficient economies, that in many cases lack backup options. From agriculture to semiconductor manufacturing, policymakers are increasingly considering options to strengthen economic resiliency. In developed markets capital investment into fixed assets, including information technology systems, ranged from 18% of GDP in the US in 2023 to 28% in Japan. Building redundant systems would require increased investment, and come at the cost of reduced margins.

Source: US Bureau of Economic Analysis, June 2024.