Geopolitical Risk Management
According to the Global Risks Report 2026 from the World Economic Forum, geopolitical and geoeconomic tensions are among the most pressing threats facing the world today: in the short term, geoeconomic confrontation — the strategic use of economic tools like trade restrictions, sanctions, and technology controls — was identified as the top risk likely to trigger a major crisis, closely followed by state-based armed conflict, reflecting how intensifying rivalries and weakened multilateral cooperation are increasing systemic vulnerability across economies and societies.
GEOPOLITICAL RISK MANAGEMENT
- In 2025 alone, tariff escalations between major economies reshuffled more than $400 billion in global trade flows, while disruptions across major shipping routes pushed container shipping costs up 40% year-on-year. This structural shift makes geopolitical sourcing a critical business function.
- The following factors are all active supply chain disruptors as of early 2026.
1. U.S. Policy Volatility and Tariffs
2.U.S.-China Rivalry
3. Wars and Political Tensions
4. European Competitiveness Challenges
GEOPOLITICAL SOURCIG AND SUPPLY CHAIN RESILIENCE
- The reality for procurement teams is stark: supply chain disruption in 2026 will be constant and structural. According to recent analysis, nearly three-quarters of business leaders now prioritize resilience investments, viewing the ability to withstand disruption not merely as risk mitigation but as a driver of growth and competitive advantage. However, this requires a fundamental redesign of operating models rather than incremental adjustments. competitive advantage. However, this requires a fundamental redesign of operating models rather than incremental adjustments.
ESG GEOPOLITICS
- Carbon border taxes, forced-labour import bans, supply chain transparency laws, and sustainability disclosure regimes are increasingly used to influence trade flows and industrial positioning. What appears as compliance is often geopolitical leverage: jurisdictions export their values through regulation, reshaping global sourcing decisions and capital allocation.
- For companies, ESG is therefore not just a reporting exercise but a geopolitical variable — one that can restrict market access, trigger reputational backlash, or create first-mover advantage depending on how proactively it is integrated into strategy.
EXPOSURE MANAGEMENT
- Exposure management is the assessment and control of a company’s financial, operational, legal, and reputational dependencies across borders.
- It includes identifying risk to quantifying concentration — in suppliers, currencies, jurisdictions, logistics routes, data flows, and political regimes — and deliberately reducing risks. Effective exposure management requires visibility, stress-testing, and mitigation mechanisms such as diversification, hedging, contractual safeguards, and strategic buffers.
- It is about ensuring that no single geopolitical event can disproportionately destabilise the enterprise.
