A Guide to Supply Chain Risk Management in an Uncertain World

Tariffs, geopolitical conflict, regulatory fragmentation, and climate disruptions are forcing companies to rethink supply chain visibility and compliance—and how to defend themselves when disruptions become supply chain disputes.

Key Takeaways

• Renewed pressure on global supply chains from tariffs, geopolitical conflict, and regulatory fragmentation is increasing both uncertainty and complexity for businesses.
• Strategies such as nearshoring, multisourcing, and enhanced compliance monitoring are becoming central to risk management.
• Organizations that invest in documentation, supplier visibility, and contingency planning will better position themselves to mitigate risk and defend their interests when disputes arise.

Six years ago, COVID-19 threw the world’s supply chains into disarray and ushered in a new era of volatility. Yet as pandemic-era supply shocks have receded, other disruptions present new complications. The World Bank Group’s Global Supply Chain Stress Index recently reached its highest level since 2022, underscoring how fragile global trade remains.

While pressures may evolve, the results for businesses are familiar: uncertainty and complexity. Trade tensions between the United States and China, conflicts affecting major shipping routes, and mounting customs enforcement have forced organizations around the world to rethink how they source, move, and monitor goods.

Keeping up with these headwinds itself is a challenge. Understanding these forces—and how they are reshaping global trade and supply chains—is one of the most effective ways executives can mitigate risk and defend their interests when disruptions turn into disputes.

The Forces Driving Supply Chain Complexity

Several trends will shape the future of supply chains as organizations adapt to a more fragmented and volatile global economy. Broadly speaking, they fall into two categories: the forces creating disruption and the strategies companies use to respond.

1. Structural Pressures

• • Tariffs: Tariffs have become a defining feature of the global supply chain landscape in the Trump presidential era. A wave of actions and countermeasures in recent years has increased costs and uncertainty for cross-border businesses.
  • Regulatory fragmentation: Businesses are navigating an increasingly complex framework of regulatory requirements across jurisdictions. Diverging approaches to sustainability, supply chain due diligence, energy policy, trade compliance, and disclosure obligations make it harder to maintain consistent operations across global markets.
  • Geopolitical conflict: Supply chains rely on predictable trade routes and stable international relationships. Ongoing conflicts, shifting alliances, new sanctions, and disruptions to key shipping corridors, such as the Strait of Hormuz, make global trade more complex and less predictable.

“While the Middle East conflict hasn’t dented equipment supply chains much (the industry doesn’t source heavily from that region), a China-Taiwan conflict would present a bigger risk scenario because a significant volume of O&G components comes from Taiwan, China, and other countries in the region. Any disruption would affect product sourcing and marine shipping routes, with impacts on the latter creating negative effects on costs, timing, and cargo security.”

• • Customs and trade enforcement: Mounting scrutiny of tariffs, sanctions, country-of-origin claims, and supply chain compliance is making visibility into suppliers and sourcing practices more important than ever.

2. Business Responses

• • Nearshoring, friendshoring, and reshoring: Companies are reassessing where products are made and where their components and raw materials originate. Many organizations are redesigning supply chains to improve resilience, reduce geopolitical risk, and shorten the distance between suppliers and customers. This shift generally takes three forms:
    • Nearshoring: moving manufacturing or sourcing closer to end markets
    • Friendshoring: moving manufacturing or sourcing to countries viewed as reliable geopolitical partners or stable trading allies
    • Reshoring: returning manufacturing or sourcing to a company’s home country

“[M]ore diversification does not equate to less risk. ‘Friendshoring’ efforts to move final assembly and primary sourcing out of high-tariff jurisdictions like China to preferred trading partners such as Vietnam, India, or Mexico have made supply chains longer, more complicated, and significantly more opaque.”

• • Multisourcing: Relying on a single supplier or region can create significant vulnerabilities when disruptions occur. As a result, many organizations are adopting multisourcing strategies, spreading production and procurement across multiple suppliers, countries, or regions to reduce risk and improve resilience.
  • Visibility and digitization: Companies are investing in technology that provides deeper insight into suppliers, logistics networks, and inventory levels. Greater visibility can help organizations identify risks earlier, respond more quickly to disruptions, and demonstrate compliance when questions arise.

“Leaders across the industry are investing in AI, automation, analytics, and new operating models. But those efforts all depend on trusted data.”

• • Inventory strategy: The just-in-time model that dominated supply chain management for decades is under increasing pressure. To reduce the risk of shortages and disruptions, many organizations are holding larger inventory buffers and maintaining greater reserves of critical products and components.

Where Supply Chain Disruptions Becomes Disputes

Due to the long and intricate character of supply chains, things do not always go according to plan: costs rise, shipments are delayed, regulations change, and suppliers fail to deliver. Those operational challenges often lead to disputes.

But the nature of these disputes is shifting. Parties are being asked to defend decisions, demonstrate compliance, and determine who bears responsibility when things go wrong. In this environment, clear evidence and thorough documentation can make the difference between manageable disruption and a costly dispute.

“The next generation of supply chain disputes will not—as has long been the case—turn only on whether goods arrived late, costs increased, or a supplier failed to perform. It will instead turn on substantive evidence: whether companies can prove how goods moved, where inputs originated, and who controlled the counterparties; and whether sanctions and export-control risks were assessed, artificial intelligence (AI)-enabled supply chain tools made defensible decisions, and management acted before disruption became revenue loss.”

• Supplier and contract disputes: Delivery delays, quality failures, force majeure claims, and pricing disagreements remain common sources of conflict, particularly when disruptions create unexpected costs or shortages.
• Customs and tariff disputes: Businesses increasingly face challenges involving country-of-origin determinations, tariff classifications, and customs audits.
• Sanctions and trade compliance disputes: Export controls, sanctions regimes, and restricted-party regulations continue to evolve, creating compliance risks for organizations operating across jurisdictions.
• Environmental, social, and governance (ESG) and human rights disputes: growing expectations around supply chain transparency are leading to disputes involving forced labor allegations, environmental claims, and supplier due diligence obligations.

By the Numbers

The statistics below help illustrate how dramatically the global supply chain landscape has changed:

• Three percentage points: projected decline in global trade growth between 2025 and 2026
• $35 trillion: value of global trade, which continues to set records despite growing geopolitical tensions
• Forty percent: increase in shipping costs year over year, highlighting the continuing impact of supply chain disruption
• Over $6.8 billion: total amount recovered by the US government in False Claims Act (FCA) matters during fiscal year 2025
• Twenty years: maximum statutory federal prison term under 18 USC 545 for introducing merchandise into the US via false country-of-origin statements
• Fifty-five percent: share of supply chain leaders increasing investments in technology and innovation

How Organizations Are Strengthening Supply Chain Visibility and Compliance

“In today’s global supply chains, resilience alone is not enough. Operations and finance executives must turn data-driven insights into action, then capture and measure financial impacts.”

While organizations cannot control tariffs, geopolitical conflicts, or extreme weather, they can control how prepared they are to respond. Building resilience means investing in visibility, documentation, value chain risk management frameworks, and contingency planning before disruptions occur.

• Know your suppliers: Businesses are expected to understand their direct supplies, subcontractors, and upstream partners that support them. This visibility is essential for both compliance and risk management.
• Data and monitoring: Real-time visibility into suppliers, logistics networks, weather events, and geopolitical developments allows organizations to identify risks earlier and respond quickly.
• Diversification: Relying on a single supplier, region, or shipping route can create vulnerabilities. Diversifying suppliers and logistics networks help organizations absorb shocks when disruptions occur.
• Scenario planning: Stress-testing supply chains against potential disruptions (e.g., tariffs, sanctions, natural disasters, and military conflicts) can help identify weaknesses before they become crises.
• Contract management: Companies are paying closer attention to force majeure provisions, pricing mechanisms, termination rights, and other contractual safeguards designed to allocate risk.

“Stakeholders should consider how tariff costs are passed through and to whom; how overall allocation of risk is structured across parties under the contract; and how force majeure, escalation, and notice provisions are defined and triggered. The goal is to be explicit about how risk is distributed across the contract and what the process looks like when that risk shows up.”

• Documentation and evidence: Documentation can be the difference between quickly resolving a dispute and becoming embroiled in one. While artificial intelligence does help generate and organize records, it also creates new risks if outputs are inaccurate or poorly verified.

Supply Chain Volatility Is the New Normal

Globalization is not ending, but the economic and trade landscape is becoming more fragmented, regulated, and difficult to predict. Businesses face a major challenge with the growing complexity of managing supply chains in an uncertain world.

Volatility will occur. Organizations need to control how prepared they are for when that happens. Companies that invest in visibility, documentation, supplier relationships, and contingency planning will be better positioned to absorb disruptions—and defend themselves should disruptions become disputes.