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The biggest supply chain risks across industries

Discover the top industry supply chain risks including geopolitical tensions, economic instability, and emerging tech threats impacting resilience strategies.

09/30/2025 · 3 minute read

Global supply chains are the cornerstone of modern trade, enabling the flows of goods and services and driving significant benefits such as increased productivity, higher incomes, and improved living standards worldwide. However, in recent years, the risks associated with these networks have become more pronounced. A combination of global shocks and the inherent complexity of trade has led to frequent supply chain disruptions that can interrupt operations, impact profitability, and damage brand reputation. According to Oliver Wyman’s 2025 supply chain survey, companies have major concerns over their supply chain resilience going forward.

Understanding what supply chain risk is, why managing it is important, and how to mitigate these risks is essential for organizations aiming to stay resilient in an uncertain environment.

What is supply chain risk?

Supply chain risk refers to the potential for disruptions or vulnerabilities within the supply chain that negatively affect the delivery of products or services. Modern supply chains rely on a vast ecosystem of suppliers, manufacturers, distributors, and logistics providers. Risks can arise from many of these sources, as well as external factors such as the impacts of climate change, political tensions, cyberattacks, shifting trade policies, and workforce shortages.

Why is supply chain risk management important?

Supply chain management is essential to business operations. Given the complexity of supply chains, risks can emerge at any point, potentially causing operational, financial, and reputational damage.

Effective supply chain risk management helps organizations:

  • Protect against disruptions: Identify vulnerabilities and develop strategies to mitigate potential risks.
  • Promote financial stability: Avoid or reduce costly delays, expense increases, and revenue losses that impact the bottom line.
  • Support reputation management: Prevent the types of product shortages, delays, or quality issues that can harm brand trust.
  • Comply with regulations: Meet growing demands for transparency, sustainability, and ethical sourcing.
  • Diversify suppliers: Reduce dependence on single-source suppliers and assess risks across partners and suppliers.
  • Create a competitive advantage: Build strategic resilience that differentiates the business.
  • Stay ahead of emerging risks: Adapt to evolving technologies and global trade patterns with ongoing risk assessments.

What risks can affect supply chains?

Supply chain risks encompass a range of internal and external threats, including:

  • Global events: Political and economic disruptions — such as conflicts, trade disputes, strikes, and sanctions — can delay transportation, increase costs, alter trade routes, and cause shortages. For example, a wide range of industries are affected by tariff changes on steel and aluminum, including automotives, construction, and manufacturing.  
  • Operational risks: These include transportation and logistics failures, inventory management, human error, supplier disruptions, production failures, and cybersecurity threats. Cyber threat actors are increasingly targeting utilities; reported incidents include unauthorized access to a Massachusetts power utility for over 300 days, as well as breaches of other US critical infrastructure, putting supply chains at risk.
  • Natural disaster risks: Extreme weather events such as hurricanes, flooding, and earthquakes can halt production, transportation, and distribution. For example, droughts affecting the Mississippi River have disrupted maritime trade, increased container costs, and impacted the shipment of grains, fertilizer, metals, and petroleum.
  • Economic/financial risks: Credit risk, market volatility, labor shortages, and supplier financial instability can affect supply, demand, pricing, and quality. According to Marsh’s Global construction risk review 2025, inflation and economic volatility rank among the top business risks globally, especially in the US construction sector, where it was ranked as the main risk. In the construction sector, cash flow challenges from delayed payments can jeopardize large projects that require upfront investments.

Steps to effective supply chain risk management

In today’s environment, many companies, especially those in high-risk sectors like automotive, manufacturing, energy, utilities, retail, and wholesale, should prioritize and act on supply chain resilience.

Here are five steps to begin:

  1. See your full supply chain: While many companies understand their first-tier suppliers and known risks, visibility often diminishes further up the supply chain, creating blind spots and vulnerabilities. For example, Marsh McLennan’s Sentrisk™ found that 65% of companies have at least one bottleneck in their supply chain that could cause catastrophic disruption if it failed. Mapping the entire supply chain with a supply chain risk assessment is therefore critical to identifying these vulnerabilities.
  2. Identify key suppliers and components in the supply chain: Assess whether risks can be spread by using multiple suppliers and logistics options. Mapping reveals critical nodes that, if disrupted, could halt production or damage brand reputation. This includes suppliers with limited alternatives, such as consumer electronics and grocery industries that have complex components, niche markets, and reliance on specific raw materials, or those dependent on critical infrastructure like roads or waterways, which could become chokepoints.  
  3. Understand the risks: Early identification of potential flash points allows companies to focus on building resilient supply chains through strategic planning. Furthermore, understanding concentration of risk exposure — for instance, most of the semiconductor industry's raw materials risk stems from supply concentration, rather than physical scarcity — can present more informed mitigation options.
  4. Pre-empt risks through mitigation: Preparedness can include real-time monitoring, early warning systems, recovery plans for critical suppliers, and contingency plans for alternative supply lines. Quantifying risks helps define risk appetite, set thresholds, and optimize strategies by balancing mitigation costs against risk reduction.
  5. Transfer risks where possible: Risk transfer complements risk reduction. Some risks cannot be fully mitigated and benefit from insurance solutions. While insurance coverage for business interruption protects against financial losses from physical damage to a company’s own locations, coverage for upstream supplier disruptions — especially beyond tier 1 — is more complex. Identifying exposure levels, understanding hazards at supplier sites, and quantifying risks are essential to developing effective risk transfer programs. Newer, innovative solutions are also emerging. For example, a tailored parametric solution might respond based on a specified water level in a river that serves as a key transportation route, guarding against potential disruptions.   

Staying ahead of the changing nature of supply chain risks

As global economies become more interconnected, supply, demand, and connectivity shocks have grown in complexity. As such, supply chain risk management is no longer optional — it is a strategic imperative. By understanding the diverse risks that threaten supply chains and implementing comprehensive risk management practices, companies can take actions to protect operations, safeguard financial performance, and maintain their reputations. Combining transparency, risk identification, mitigation, and risk transfer with advanced technology and strategic planning enables businesses to build resilient supply chains that can thrive amid uncertainty.

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