In recent years, significant changes in global trade policies, driven largely by U.S. tariffs, have introduced a wide range of risks for businesses worldwide. This evolving landscape has affected supply chains, operations, and profitability, making the economic environment increasingly volatile. James Crask, the Global Head of Resilience Advisory at Marsh, emphasizes the urgency for businesses to prepare for these uncertainties. He warns that additional tariffs may arise and stresses the limited timeframe available for corporate entities to strengthen their resilience strategies.

In today's unprecedented trade environment, businesses must prioritize scenario planning to navigate systemic risks effectively.

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One critical area that businesses often overlook is their supply chain vulnerability, particularly in terms of upstream visibility. In the wake of the COVID-19 pandemic, many companies enhanced their focus on resilience, yet they frequently suffer from a lack of insight into their supply chain beyond tier-one suppliers. Crask highlights that these blind spots can mask considerable risks, as components sourced domestically may originate from countries like China, Mexico, or Canada, which are entangled in tariff disputes. Without a comprehensive mapping of their supply chain, businesses cannot adequately assess these risks or design scenarios to test their resilience effectively.

To address these challenges, Crask advocates for technology-driven solutions that enhance supply chain analysis. For example, Marsh’s AI-powered platform, Sentrisk, enables businesses to map their supply chains across all tiers meticulously. This tool helps identify specific vulnerabilities at the site, supplier, or component level, allowing companies to model their tariff exposure based on product origins and sales destinations. By utilizing such tools, businesses can explore mitigation strategies, such as reconfiguring their supply chains or redesigning products to minimize reliance on vulnerable components. Additionally, strategies like purchasing inventory in advance or securing supplier capacity early may help mitigate potential profit margins impacts.

The urgency for businesses to act is underscored by escalating geopolitical tensions surrounding trade. Companies must evaluate their reliance on high-risk regions and assess their vulnerabilities to export controls. The true risk lies not just in being blindsided by global politics but in being more vulnerable than competitors. Crask warns that companies significantly affected by trade policies while their competitors remain unscathed risk losing market share. To prevent such outcomes, businesses should utilize the current window of opportunity to map their supply chains, analyze exposures, and stay informed about their competitors' strategies. Proactivity in scenario planning and risk management is crucial, advised Crask, emphasizing that now is the time to start preparing for future trade policy changes.