A new report from Ivalua, a global leader in spend management, has found that nearly three quarters (73%) of UK businesses expect geopolitical risk to intensify over the next 12 months, with 62% saying their supply chains can’t deal with the shifting geopolitical sands.

The report, Adapting Amid Uncertainty: How Geopolitical Disruption is Reshaping Supply Chains, surveyed 300 UK supply chain and procurement decision makers. It found that the War in Ukraine has negatively impacted confidence in their organisation’s supply chain the most (77%). This was followed by U.S. tariffs (75%), military exercises and testing disrupting major shipping straits (73%), tensions between China and Taiwan (62%), and the War in Gaza (58%).

The impact of these events is being felt on the bottom line. Over a quarter of UK firms (26%) say geopolitical risk has put profitability under pressure, while nearly one in four (23%) have already passed these costs on to customers. Almost one fifth (18%) have also been forced to cut ties with suppliers in certain countries, highlighting how global disruption is fragmenting supply chains.

“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.”

Firms Lack Preparedness for Geopolitical Shocks

Over the last year, businesses have taken steps to reduce geopolitical risk. Strategies that businesses have found effective include onboarding alternative suppliers (73%) and collaborating with existing ones (72%). Other approaches, including nearshoring (64%), improving geographic diversity (62%) and hiring additional procurement staff (61%), have provided incremental benefits, though no single measure eliminates exposure to risk entirely.

Despite these efforts, just 22% of firms say they are completely prepared for geopolitical risk. Preparedness is best in energy and utilities (59%), while construction and real estate (9%) and hospitality, travel and tourism (3%) are the least prepared. Recognising these gaps, a clear majority of businesses (71%) 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 continued.

“AI can bring dispersed data together, highlight potential risks, identify alternative suppliers, and give procurement teams the foresight to act before disruption hits. If a critical shipping route closes, AI can model different logistics scenarios to keep production on track and costs under control. Combined with closer supplier collaboration, technology gives businesses the agility to respond quickly to geopolitical shocks while safeguarding profitability”.

Find out more about the technology helping to build supply chain resilience in an era of geopolitical risk in the full report.