Stay Ahead of Geopolitical Supply Chain Risks
Stephan Schmitz/theispot.com
The conventional playbook for managing supply chain risk is falling short in the face of increasing disruption from geopolitical events like trade wars, sanctions, and armed conflict. A three-part framework for understanding geopolitical signals through scenario planning and risk monitoring, anticipating risks by creating flexible options, and adapting quickly to disruptions can help companies protect their supply chains.
The conventional playbook for managing supply chain risk — designed for natural disasters, supplier failures, and short-term market volatility — is falling short in the face of persistent, politically motivated disruptions such as trade wars, sanctions, and armed conflict. As the maneuverings of national leaders threaten supply chains, global companies are struggling to mount effective responses.
At the heart of the challenge are high levels of both complexity and uncertainty. Long-standing U.S. trade policies have been disrupted and become more unpredictable; acts of war or terrorism can upend executives’ assumptions about security risk overnight. The scale and complexity of companies’ supply chains make it challenging to predict the impact of such events across their networks. Against this backdrop, it’s critical that companies make a more systematic effort to understand, monitor, and manage geopolitical risks.
Companies may approach the same risks in different ways. There is no single solution or guaranteed outcome. But the businesses we studied have one practice in common: They have — or strive to have — end-to-end visibility into their supply chains. They prioritize understanding the contributions of and the risks to their suppliers and customers at every level. While they may have an incomplete picture, given the challenges of obtaining information from suppliers outside of the top tier, they do their best to stay well informed, create new options to enable flexibility, and then make the necessary adaptations to their procurement networks as needed. (See “The Three Pillars of Supply Chain Risk Management.”)
We developed a three-part framework to help managers structure their thinking about conditions that are constantly in flux. The framework, which emerged from our study of 13 multinational companies, offers a guide to help them understand geopolitical signals, develop strategies that anticipate and mitigate supply chain risks before they materialize, and respond to events on the ground.
References
1. P. Schoemaker and S. Phadnis, “How to Make Scenario Planning Stick,” MIT Sloan Management Review 67, no. 2 (winter 2026): 28-35,
2. M. Cohen, S. Cui, S. Doetsch, et al., “Bespoke Supply-Chain Resilience: The Gap Between Theory and Practice,” Journal of Operations Management 68, no. 5 (July 2022): 515-531,
3. W. Klibi, K. Trepte, and J.B. Rice Jr., “Make Smarter Investments in Resilient Supply Chains,” MIT Sloan Management Review 66, no. 1 (fall 2024): 53-57.
4. Y. Niu, N. Werle, M. Cohen, et al., “Restructuring Global Supply Chains: Navigating Challenges of the COVID-19 Pandemic and Beyond,” Manufacturing & Service Operations Management 27, no. 4 (July-August 2025): 1025-1036,
5. N. Agrawal, M.A. Cohen, R. Deshpande, et al., “How Machine Learning Will Transform Supply Chain Management,” Harvard Business Review 102, no. 2 (March-April 2024): 128-137.
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