Global Supply Chains Between Geopolitics and Sustainability: Why Companies Need to Rethink Risk Management
Ronald Bogaschewsky, Holger Müller, Jasmin Möller
Jul 20, 2026
#EU / Western Europe
#Sustainability standards
Global supply chains have long been a cornerstone of an efficient and interconnected world economy. Companies benefit from international sourcing markets, specialized suppliers, and worldwide sales opportunities. At the same time, however, their vulnerability to external disruptions has increased significantly. Geopolitical conflicts, new regulatory requirements, cyberattacks, and climate-related extreme weather events directly impact supply chains and can result in severe disturbances, from temporary shut-downs of manufacturing sites to bankruptcy. This is of specific relevance for export-oriented economies like Germany. The question is no longer whether disruptions in supply chains will occur, but how our companies can effectively manage them.
Against this backdrop, the empirical study “Supply Chains at the Intersection of Geopolitics and Sustainability“ was conducted among German companies. The study explores how firms (73 % Industry; 23 % Services; 4 % Trade) assess emerging risks in global supply chains and which measures they consider most important for strengthening resilience.
Against this backdrop, the empirical study “Supply Chains at the Intersection of Geopolitics and Sustainability“ was conducted among German companies. The study explores how firms (73 % Industry; 23 % Services; 4 % Trade) assess emerging risks in global supply chains and which measures they consider most important for strengthening resilience.
International Risk Assessments Highlight Clear Priorities
International risk reports paint a striking picture. Studies like the World Economic Forum’s Global Risks Report (WEF, 2025), the UN Global Risk Report (UN, 2024), or the Allianz Risk Barometer (Allianz, 2025) consistently identify geopolitics, sustainability, and technology as the dominant sources of future disruption.
Geopolitical risks have moved to the forefront. Armed conflicts, geopolitical rivalries, trade disputes, and economic fragmentation are increasingly viewed as major threats to business continuity. At the same time, sustainability-related risks are gaining prominence. Extreme weather events, climate change, biodiversity loss, and environmental degradation feature prominently in global risk assessments, particularly when viewed over a longer time horizon. Furthermore, cybercrime remains one of the most frequently cited business risks worldwide, while misinformation, disinformation, and growing regulatory complexity add further uncertainty to the business environment.
These assessments suggest that companies face a combination of interconnected risks that extend well beyond traditional operational concerns.
Geopolitical risks have moved to the forefront. Armed conflicts, geopolitical rivalries, trade disputes, and economic fragmentation are increasingly viewed as major threats to business continuity. At the same time, sustainability-related risks are gaining prominence. Extreme weather events, climate change, biodiversity loss, and environmental degradation feature prominently in global risk assessments, particularly when viewed over a longer time horizon. Furthermore, cybercrime remains one of the most frequently cited business risks worldwide, while misinformation, disinformation, and growing regulatory complexity add further uncertainty to the business environment.
These assessments suggest that companies face a combination of interconnected risks that extend well beyond traditional operational concerns.
German Companies Prioritize Different Risks
Our study reveals that, at least from the standpoint of the procurement experts that answered our questionnaire, German companies assess the risk landscape somewhat differently from international expert communities. Respondents evaluated a range of supply-chain-related risks on a scale ranging from minor (1) to existential (5) – the mean values are shown in Figure 1.
The most critical risks identified were legal and regulatory changes as well as tariff conflicts, sanctions, and trade restrictions. Many companies appear to perceive regulatory developments not merely as compliance challenges but as direct constraints on their strategic flexibility and competitiveness.
Political instability, cybercrime, cyber warfare, military conflicts, and the regional concentration of raw materials or technologies were also regarded as highly relevant. These risks are viewed as immediate threats to supply security and the smooth functioning of global value chains.
By contrast, sustainability-related risks received significantly less attention. Extreme weather events, natural disasters, and broader changes to Earth systems were generally ranked lower than geopolitical and regulatory concerns. This finding stands in sharp contrast to international risk reports, which consistently identify climate-related and ecological risks as some of the most important long-term challenges facing businesses and societies.
It should be noted that some risks show a rather low mean value, while a substantial portion of the respondents might have rated the particular risk as existential or very high. This sheds light on the fact that risk exposure is related to many factors such as specific business model, geographic structure of the supply chain, applied technologies, company size, etc.
The most critical risks identified were legal and regulatory changes as well as tariff conflicts, sanctions, and trade restrictions. Many companies appear to perceive regulatory developments not merely as compliance challenges but as direct constraints on their strategic flexibility and competitiveness.
Political instability, cybercrime, cyber warfare, military conflicts, and the regional concentration of raw materials or technologies were also regarded as highly relevant. These risks are viewed as immediate threats to supply security and the smooth functioning of global value chains.
By contrast, sustainability-related risks received significantly less attention. Extreme weather events, natural disasters, and broader changes to Earth systems were generally ranked lower than geopolitical and regulatory concerns. This finding stands in sharp contrast to international risk reports, which consistently identify climate-related and ecological risks as some of the most important long-term challenges facing businesses and societies.
It should be noted that some risks show a rather low mean value, while a substantial portion of the respondents might have rated the particular risk as existential or very high. This sheds light on the fact that risk exposure is related to many factors such as specific business model, geographic structure of the supply chain, applied technologies, company size, etc.
A Short-Term Perspective Shapes Risk Perception
Quite obviously, the usually more operational view of procurement managers is well apart from the risk evaluations by business leaders. Accordingly, short-term business practices might not always be compatible with mid- to long-term risk strategies of businesses.
This pattern is particularly visible in the assessment of military conflicts and geopolitical dependencies. While companies acknowledge these risks, they often appear to focus on direct disruptions rather than broader structural vulnerabilities. Similarly, the concentration of critical raw materials and technologies in a limited number of countries is frequently viewed as a manageable issue, despite growing concerns about strategic dependencies in many industrial sectors.
Our findings indicate that risk perception remains strongly influenced by current business realities, partly defined by immediate geopolitical disruptions, whereas long-term environmental and geopolitical developments receive less attention and their potential consequences maybe often underestimated. Even though we conducted our study before the US-Iran war, learnings from the past may suggest that our findings could still be representative.
This pattern is particularly visible in the assessment of military conflicts and geopolitical dependencies. While companies acknowledge these risks, they often appear to focus on direct disruptions rather than broader structural vulnerabilities. Similarly, the concentration of critical raw materials and technologies in a limited number of countries is frequently viewed as a manageable issue, despite growing concerns about strategic dependencies in many industrial sectors.
Our findings indicate that risk perception remains strongly influenced by current business realities, partly defined by immediate geopolitical disruptions, whereas long-term environmental and geopolitical developments receive less attention and their potential consequences maybe often underestimated. Even though we conducted our study before the US-Iran war, learnings from the past may suggest that our findings could still be representative.
Strategic Supplier Partnerships as the Preferred Response
When asked about risk mitigation measures, companies showed a clear preference for cooperation and transparency rather than for far-reaching structural changes (see Figure 2).
The preferred risk mitigation strategy is the development of strategic partnerships with suppliers. Close and long-term relationships are seen as a key mechanism for improving transparency, identifying risks at an early stage, and developing joint solutions to emerging challenges.
Almost equally important are enhanced early-warning systems and more intensive risk monitoring. Companies increasingly recognize the value of identifying disruptions before they escalate into major operational problems.
The results suggest that companies place considerable trust in information sharing, collaboration, and visibility across supply networks and that extreme actions such as shifting major parts of the supply chain to other geographies are the exception, so far.
The preferred risk mitigation strategy is the development of strategic partnerships with suppliers. Close and long-term relationships are seen as a key mechanism for improving transparency, identifying risks at an early stage, and developing joint solutions to emerging challenges.
Almost equally important are enhanced early-warning systems and more intensive risk monitoring. Companies increasingly recognize the value of identifying disruptions before they escalate into major operational problems.
The results suggest that companies place considerable trust in information sharing, collaboration, and visibility across supply networks and that extreme actions such as shifting major parts of the supply chain to other geographies are the exception, so far.
Diversification Is Reshaping Global Sourcing
Despite these findings, the study points to a gradual diversification of sourcing strategies (see Figure 3).
While the talk is out for quite a while, only a few seem to walk the talk. In the overall picture, major reductions of the purchasing volumes from the PR China or the United States obviously cannot be seen. While a substantial portion of companies want to reduce their engagement in these two countries, many others want to expand their business activities there. However, it seems obvious that there is a broad trend to expand sourcing activities throughout nearly all geographies in the world. This may constitute a second wave of Global Sourcing.
However, the study also highlights the persistence of existing dependencies. Despite perceived geographical risks, many companies continue to rely on specific countries because of cost advantages, established supplier networks, or the exclusive availability of certain raw materials and technologies.
While the talk is out for quite a while, only a few seem to walk the talk. In the overall picture, major reductions of the purchasing volumes from the PR China or the United States obviously cannot be seen. While a substantial portion of companies want to reduce their engagement in these two countries, many others want to expand their business activities there. However, it seems obvious that there is a broad trend to expand sourcing activities throughout nearly all geographies in the world. This may constitute a second wave of Global Sourcing.
However, the study also highlights the persistence of existing dependencies. Despite perceived geographical risks, many companies continue to rely on specific countries because of cost advantages, established supplier networks, or the exclusive availability of certain raw materials and technologies.
Resilience Requires a Long-Term Perspective
The study demonstrates that companies are actively addressing supply chain risks, but their current responses remain largely focused on immediate operational challenges. International risk assessments, by contrast, increasingly emphasize long-term systemic threats, particularly those related to climate change, environmental degradation, and geopolitical fragmentation.
Building resilient supply chains therefore requires a broader perspective. Geopolitical dependencies, regulatory uncertainty, digital threats, and ecological risks must be integrated into strategic decision-making processes rather than treated as isolated operational issues.
As global uncertainty continues to rise, resilience can no longer be regarded as a purely operational objective. It is becoming a core element of corporate strategy and a decisive factor for long-term competitiveness.
The EU Commission provides guidelines for assessing risks in the many directives connected with the EU Green Deal and the Fit-for-55 initiative. However, these regulations are most often interpreted by companies as being oppressive, thus causing administrative workload only. It seems overdue to transform this well-intentioned body of regulation into a value-adding approach that helps avoiding and mitigating some of the many risks companies are facing these days in a geopolitically unstable world. However, accepting the fact that in many cases single firms are simply not able to cope with certain risks such as securing the supply of critical raw materials, effective measures by both, the EU and by Industry initiatives are needed to ensure the competitiveness of our companies. A “wish list” alone such as defined in the Critical Materials Act may provide an impetus for action, but seems not to be enough.
This blog is based on the study "Supply Chains at the Intersection of Geopolitics and Sustainability 2026". Download: https://cfsm.de/studien/
Building resilient supply chains therefore requires a broader perspective. Geopolitical dependencies, regulatory uncertainty, digital threats, and ecological risks must be integrated into strategic decision-making processes rather than treated as isolated operational issues.
As global uncertainty continues to rise, resilience can no longer be regarded as a purely operational objective. It is becoming a core element of corporate strategy and a decisive factor for long-term competitiveness.
The EU Commission provides guidelines for assessing risks in the many directives connected with the EU Green Deal and the Fit-for-55 initiative. However, these regulations are most often interpreted by companies as being oppressive, thus causing administrative workload only. It seems overdue to transform this well-intentioned body of regulation into a value-adding approach that helps avoiding and mitigating some of the many risks companies are facing these days in a geopolitically unstable world. However, accepting the fact that in many cases single firms are simply not able to cope with certain risks such as securing the supply of critical raw materials, effective measures by both, the EU and by Industry initiatives are needed to ensure the competitiveness of our companies. A “wish list” alone such as defined in the Critical Materials Act may provide an impetus for action, but seems not to be enough.
This blog is based on the study "Supply Chains at the Intersection of Geopolitics and Sustainability 2026". Download: https://cfsm.de/studien/
References
Allianz (2025), “Allianz Risk Barometer. Identifying the major business risks for 2025”, München. https://commercial.allianz.com/content/dam/onemarketing/commercial/commercial/reports/Allianz-Risk-Barometer-2025.pdf.
UN (2024): United Nations Global Risk Report 2024, New York, NY, USA, https://unglobalriskreport.org/UNHQ-GlobalRiskReport-WEB-FIN.pdf.
World Economic Forum (WEF) (2025), “The Global Risks Report 2025 20th Edition”, https://www.weforum.org/publications/global-risks-report-2025/.
Allianz (2025), “Allianz Risk Barometer. Identifying the major business risks for 2025”, München. https://commercial.allianz.com/content/dam/onemarketing/commercial/commercial/reports/Allianz-Risk-Barometer-2025.pdf.
UN (2024): United Nations Global Risk Report 2024, New York, NY, USA, https://unglobalriskreport.org/UNHQ-GlobalRiskReport-WEB-FIN.pdf.
World Economic Forum (WEF) (2025), “The Global Risks Report 2025 20th Edition”, https://www.weforum.org/publications/global-risks-report-2025/.
Prof. Dr. Ronald Bogaschewsky heads the Chair Business and Industrial Management at the Julius-Maximilians-University of Wuerzburg. He is co-founder of the Center for Supply Management (CfSM) GmbH which is highly renowned for application-oriented studies in the field of Procurement, Global Sourcing, and Digitalization. As leader of the Schmalenbach-Working Group Purchasing and Logistics and former board member of the Association for Purchasing Managers in Germany he works closely together with leading companies.
Prof. Dr. Holger Müller holds the Professorship for Business Management, especially Supply Chain Management at the Leipzig University of Applied Sciences. He is co-founder of the CfSM.
Jasmin Möller is a Ph.D. candidate and Scientific Associate at the Chair Business and Industrial Management at the Julius-Maximilians-University of Wuerzburg. She is Project Manager at the CfSM.
