How is the Geopolitical Landscape Influencing Procurement?
Geopolitical Risk in Supply Chains: Is the World Getting Smaller?
The world is always changing, and certainly never more than today. Politically, environmentally and economically, the landscape is shifting in ways that we have not seen before. This impacts the way in which we do business: from the physical supply and distribution of goods, to the way in which we engage with partners providing services. Global trade operates within an environment punctuated by uncertain political alliances, war and climate related events that are increasingly extreme and unpredictable.
The Impact of Geopolitical Risk on the Transportation of Goods
The impacts on both the physical transportation of goods in a supply chain and services are different but interlinked.
The physical transportation of goods through unstable territories creates risk in supply chain reliability. Instability, check points and conflict in key transportation zones create risk that the delivery of goods will be unpredictable at best. This hampers the trust and reliability for the customer and could ultimately affect business at the consumer end of the supply chain. With market volatility, customer experience is at a premium and this risk is unaffordable.
As a key trade route, the Suez Canal is vulnerable to political interest and conflict. March 2021 saw the grounding of the Evergiven, a container ship that blocked the route for 6 days, due to a sandstorm, blocking $9 billion of cargo per day from travelling neither East nor West.
Further to this, there are ongoing threats from the Houthi militants in the Red Sea, which cause vessels to have to reroute from the Suez to avoid the conflict zone. There have been approximately 99 attacks or hijackings in the Red Sea since November 2023, including the targeting of vessels like the Minervagracht in September 2025.
Incidents in the South China Sea increase the risk to trade… especially when political disagreements escalate and trade is more often being used to strong-arm a political position.
Climate change is having an ever-increasing impact on supply chain activity. According to Everstream.ai 2024 Risk Report, an extreme weather event (costing £1 billion or more) occurs every three weeks compared to the 1980’s when one occurred every four months. These can be events such as heatwaves and lack of rainfall that result in inland waterways running low and so capacity is reduced, such as the Rhine and the Danube to wildfires in the Mediterranean (Spain, Greece, Portugal) increasing in frequency and intensity damaging routes, road networks and disrupting transport hubs.
Services are equally impacted by changes in the political and geographical landscape causing procurement teams to grapple with a more complex approach to cyber security within contracts, more detailed data laws that change in different territories, and cross-border legislation. AI driven attacks are becoming more frequent, more complex and more sophisticated. This refers to when AI is used to either target, scale or enhance the planned attack – techniques such as near -perfect phishing emails and deep fake disguised voice recognition makes use of social engineering to gain an advantage. They can also find hidden technical weaknesses – especially where less secure old legacy systems are still in place, target your supply chain by finding your least secure supplier. This may be a small, less technically advanced supplier – through which they can gain access to larger customer data or even systems.
Cyber threats are now often tracking geopolitical friction and have had devastating effects on businesses as we have seen in Jaguar Land Rover (JLR) who lost £0.5 billion and whose loss impacted not only the company itself, but its supply chain and the UK economy. Marks & Spencer (M&S) and The Cooperative Group were two major retailers that found themselves at the mercy of cybercrime in 2025. Ransomware breaches disrupted supply chain operations and the cost to the business was in the hundreds of millions.
What can Procurement do to mitigate these shifts?
Procurement teams are increasingly required to look for innovative solutions to reduce the risk, which, in the current climate is elevated in many areas of the supply chain.
Supplier Management Strategies for Geopolitical and Regional Risk
Supplier Management strategies should map geopolitical exposure in service partners and approved supplier list and look to diversify the locations of suppliers.
The trend for Nearshoring (moving part of the business to a nearby or neighbouring location rather than a more distant one), FriendShoring (developing partnerships with political allies) and Onshoring (all the company being operated domestically – within national borders) reduces risk in the supply chain and unpredictable tariffs. The focus changes from cost-based to risk mitigation, ensuring that the service provider’s compliance to data protection and other regulations is robust and that sustainability strategies align.
The impact of changing to these strategies is that the world becomes smaller. The development of new alliances and the exploration of more far-flung locations and countries is de-prioritised. This can have its benefits when physically moving goods as their environmental footprint becomes less, but when new partnerships are limited, then this can augment economic fragmentation, limit diversity and promote trade polarisation.
Cyber Resilience and AI in Supply Chain Risk Management
When creating contracts, attention should be given to key areas that have now become high risk.
To avoid unplanned increase in costs, procurement teams should build flexibility and clauses into contracts to protect against unpredictable tariff changes, data laws and across border legislation. This could involve building in buffers for tariffs or energy price spikes.
Cyber resilience is an increasingly high-risk area and it is essential to vet the digital security practices of suppliers in your supply chain. 65% of large companies cited third-party and supply chain risks as their main cyber resilience problem, marking an increase from 54% from last year.
You are only as strong as your weakest link and the impacts can be catastrophic. Educate your teams in cyber security and AI driven attacks and bake cyber resilience into your contracts.
Investment in AI/analytics for risk scanning, AI Security Governance Tools and AI driven TPRM are technology components that can ensure your suppliers meet your cyber standards and help you to see the weakest links in your supply chain.
ESG, Ethics and Social Value in Global Supply Chains
Governance and Ethics policies are high on the current geopolitical agenda, and your suppliers should align to your ESG strategy.
It is essential to assess to ensure that suppliers in your supply chain have environmental Standards including policies around net zero, carbon reductions, social responsibility such as well-being and culture should align with your own… especially if you are compliant to a standard such as B-Corp or ISO.
How Procurement Leaders Can Stay Ahead of Geopolitical Risk
Who are your suppliers and your supplier’s suppliers, where they are located? How exposed politically are they to tariff shifts or geographically to conflict zones or vulnerable to climate events that can hamper supply chain operations. Employ mitigation to these or look for a more diverse supply base so that there are options should the worst happen. Robust supply chain management is non-negotiable.
Supplier Management Strategies should focus on ensuring service providers and suppliers are robust in their own supply chain management.
Supplier data is imperative to the robustness of your supplier management strategy, and this is where AI can excel. This is a prime area for the deployment of AI into your Third-Party Risk Management (TPRM) framework. It can analyse contracts in the areas of due diligence and extract and validate data. AI can continually monitor cyber security ratings, financial position, geopolitical risk and ESG performance so that you have a continued and current appraisal of your suppliers in your supply chain.
In today’s world, Procurement can no longer rely on traditional, costled models. Instead, success now hinges on datadriven foresight, robust supplier intelligence, and diversified sourcing strategies that prioritise resilience, compliance, and operational continuity. In this environment, procurement evolves from a transactional function into a strategic safeguard; protecting organisational stability, customer experience, and longterm value creation.
To remain competitive and resilient in this new era, procurement leaders should act decisively:
- Reengineer Supplier Strategies around geopolitical and climate realities
- Elevate contract & cyber resilience as core governance priorities
- Invest in AI enabled risk management and continuous monitoring
- Build a culture of end-to-end supply chain visibility and readiness
Procurement leaders who take bold, proactive steps today will not only protect their organisations from external volatility, they will also position themselves as strategic architects of resilience, innovation, and sustain competitive advantage.
Now is the moment to modernise procurement capability, strengthen governance, and leverage AI powered intelligence to stay ahead of global disruption.
