Significant shifts in global trade policies, led by tariffs from the US, have cast a wide net of risks over businesses, exposing supply chains, operations, and profitability to volatility.
While it’s tempting to chalk this up to just another policy cycle, at least one organizational resilience expert believes there’s no room for passivity.
Further tariffs are not unlikely in the future, and businesses have a short window to prepare, warned James Crask (pictured), global head of resilience advisory at Marsh. He believes today’s trade environment is, in many ways, unprecedented.
“The breadth of what’s been proposed or announced could have a systemic impact,” Crask told Insurance Business.
“Very few people alive today have seen anything close to this in previous periods of trade volatility, protectionism, or tariff rules. That uncertainty makes it hard for business decision-makers to plan and puts a greater emphasis on scenario planning.”
Companies that rode out COVID-19’s disruption might assume they’re better equipped today, but Crask draws a sharp line between the past and the current threat landscape. He acknowledged that pandemic-induced supply chain failures forced businesses to look deeper into resilience.
But many still overlook a core vulnerability: upstream visibility. “Most know who their tier-one suppliers are. That’s standard,” Crask said. “But they often don’t know their tier-two, tier-three, or tier-four suppliers.”
This blind spot tends to obscure major risks. A component sourced from a US supplier could originate in China, Mexico, or Canada—countries caught in tariff crossfire. “If you only focus on tier one, those connections are invisible,” Crask said. “Yet those countries are also exposed to tariffs and cost increases.”
Mitigation starts with understanding where vulnerabilities lie. Without mapping their full supply chain, companies can’t accurately assess risk or design meaningful scenarios to “stress-test” their supply chain, Crask said.
Even with enhanced visibility, companies need to confront a deeper limitation. Past global shocks such as earthquakes, tsunamis, and pandemics were all considered low probability until they happened. But when they did, the impact was enormous.
“Resilience planning is limited by imagination,” Crask said. “We don’t tend to plan for worst-case or catastrophic events. Because of that failure of imagination, many businesses hadn’t stress-tested their resilience (until) COVID forced them to.”
One area where Crask sees significant traction is in technology-backed supply chain analysis. Marsh’s AI-powered platform Sentrisk enables companies to comprehensively map their supply chains across all tiers and pinpoint low, medium and high-risk vulnerabilities down to a site, supplier or component-specific level.
Using their supply chain data, businesses can model tariff exposure based on where goods come from, how much is spent, and where products are sold. Mitigation strategies, such as “rewiring” your supply chain or redesigning products to reduce exposure from specific components, can then be explored.
Other strategies include pre-purchasing inventory or locking in supplier capacity early. These moves could stave off margin hits or stockouts if trade rules tighten suddenly. “Holding extra stock ties up capital,” Crask said. “But it’s a lever you may need to pull.”
Still, all these options rest on one foundation. “You can’t make informed mitigation decisions unless you've done the scenario planning,” Crask said. “And that starts with upstream supply chain mapping.”
For companies watching geopolitical tensions escalate over trade, the need to act is immediate. Some immediate questions to ask: How much do your organization rely on high-risk regions? Are your raw materials coming from geopolitically unstable areas? Are you vulnerable to export controls?
What’s most dangerous, Crask warned, is not being blindsided by global politics: it’s being more vulnerable than your competitors.
“The worst-case scenario is being severely impacted while competitors aren’t, allowing them to gain market share,” he said. “Use this window to map your upstream supply chain, analyze your main exposures, and, if possible, get a sense of what your competitors are doing.
“Don’t wait for the next announcement. Start planning now.”
