Tech investment is needed to fight geopolitical risk to supply chains

A new report finds that nearly three quarters (73 percent) of UK businesses expect geopolitical risk to intensify over the next 12 months, with 62 percent saying their supply chains can’t deal with the shifting geopolitical sands.

The study from Ivalua, based on a survey of 300 supply chain and procurement decision-makers in the UK, shows the war in Ukraine has negatively impacted confidence in their organization’s supply chain the most (77 percent). This is followed by US tariffs (75 percent), military exercises and testing disrupting major shipping straits (73 percent), tensions between China and Taiwan (62 percent), and the war in Gaza (58 percent).

“Geopolitical risk is no longer an anomaly, it’s a permanent feature of global trade”, says Alex Saric, smart procurement expert at Ivalua. “Our research shows that no region is immune. Geopolitical shocks such as tariffs and mineral price fluctuations can erupt daily, or even hourly. UK businesses are stuck between a rock and a hard place as they either absorb costs or pass them onto customers, pushing them to the brink. Survival depends on making good decisions in critical moments, particularly as our research indicates disruption shows no sign of slowing.”

Strategies that businesses have found effective in reducing risk include onboarding alternative suppliers (73 percent) and collaborating with existing ones (72 percent). Other approaches, including nearshoring (64 percent), improving geographic diversity (62 percent) and hiring additional procurement staff (61 percent), have provided incremental benefits, though no single measure eliminates exposure to risk entirely.

Despite these efforts, only 22 percent of firms say they are completely prepared for geopolitical risk. Preparedness is best in energy and utilities (59 percent), while construction and real estate (nine percent) and hospitality, travel and tourism (three percent) are the least prepared. Recognizing these gaps, a clear majority of businesses (71 percent) say they must now invest more in technology to better identify and mitigate geopolitical risks.

“As geopolitical risk mounts, incremental steps won’t be enough to ensure long-term resilience. Businesses have more data at their disposal than ever before, but it’s fragmented, inconsistent, and hard to act on. Our study shows that while businesses have the data, what’s lacking is the technology to turn it into actionable insight”, Saric adds.

You can get the full report from the Ivalua site.

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