On some of the earliest European maps of the known world, the phrase “Here be dragons” can be found. The phrase signified uncharted or dangerous areas where cartographers warned mariners “we don’t know what’s there, so beware.” Dragons are a good analogy for the risks faced by supply chains. No one can say for sure what dragons lie ahead in 2025 for supply chains, but some risks are known. The more companies prepare themselves to face those risks the more resilient and successful they become. Corey Rhodes, CEO of Everstream Analytics, explains, “The past year has been unprecedented, with extreme weather events, heightened geopolitical tension and cybercrime destabilizing supply chains throughout the world. Navigating this year’s looming risks to build a secure supply network has never been more critical.”[1]
Some of the Dragons Supply Chains Could Face
No one can know for sure what dragons supply chains will face. Like medieval cartographers, honest prognosticators say, “We don’t know everything that’s out there, so beware?” There are, however, some well-known dragons supply chain risk managers will continue to encounter. Here are what experts say are some of them:
● Global Realignment. The CNW Group reports, “Three quarters of businesses worldwide are overhauling their supply chains by working with more rather than fewer suppliers to mitigate risks in an increasingly fragmented global environment. … [This realignment is] driven by geopolitical uncertainty which is likely to grow with the ‘America first’ policies of the new administration in the United States.”[2] It’s not just supply chains that are realigning, columnist Ezra Klein insists the whole world is realigning. In addition to uncertainties created by America’s new administration, Klein notes, “Artificial intelligence is maturing, the planet is warming, and the global fertility rate is collapsing. To look at any of these stories in isolation is to miss what they collectively represent: the unsteady, unpredictable emergence of a different world.”[3]
● Climate Change. Everstream analytics lists climate change and extreme weather as the top risk to supply chains this year. They predict, “Flooding caused by shifting climate patterns and record-high ocean temperatures is expected to cause widespread disruptions. Both small-scale and large-scale flooding events are predicted to increase in frequency, posing significant challenges for even the most advanced infrastructure systems.”[4] Beyond flooding, the risks from hurricanes, tornadoes, and other extreme weather events continue to increase. A World Economic Forum (WEF) survey of risk specialists identified environmental concerns, such as extreme weather events, biodiversity loss and ecosystem collapse, as one of the top three risks the world now faces.[5]
● Geopolitical Risks. The WEF survey ranked state-based armed conflict as the most pressing concern for 2025. Everstream Analytics agrees that geopolitical risks are high. The company listed potential disruptions from geopolitical flashpoints, including the Russia-Ukraine conflict, tensions in the South China Sea, and instability in the Middle East, as the second most likely risk supply chains will face.
● Cyber Attacks. According to Interos.ai, a supply chain risk intelligence provider, “Supply chain cyber attacks targeting physical infrastructure could cost the global economy billions in 2025.”[6] Everstream Analytics agrees that cyberthreats rank high among risks supply chains will face in 2025. The company explains, “The growing reliance on artificial intelligence and Internet of Things (IoT) devices is creating vulnerabilities across supply chains, with manufacturing and electronics sectors identified as particularly at risk. Third-party logistics providers are expected to face heightened cybersecurity threats.” As supply chains work with more suppliers, the risk of a cyberattack increases.
● Supply Chain Restrictions. Analysts at Moody’s write, “Restrictions will continue playing a large role [in supply chains], putting upward pressure on costs. The most recent examples are European tariffs on Chinese autos and the U.S. plan to prevent Chinese software and hardware from entering cars in America.”[7] Everstream Analytics agrees that resource restrictions could plague supply chains — especially those relying on rare metals. They explain, “Rising tariffs, export restrictions and a lack of supplier diversity are making rare metals more expensive and difficult to procure. China’s dominance in rare metal exports poses a significant challenge for companies seeking alternative sources.”
● Reputational risk. Moody’s also reports, “Reputational risk will likely be at its highest in recent memory. This is a result of polarization of public opinion, combined with ever-present social media. Doing business with a supplier whom a lot of your customers view negatively will be hard to navigate. Furthermore, legislation like the German Supply Chain Due Diligence Act, … exemplifies a global trend of corporate transparency and due diligence laws addressing modern slavery, forced labor, human trafficking, and environmental damage. This will continue to sharpen the focus on supplier due diligence and pose reputational and financial risks to firms with flawed processes.” Everstream Analytics agrees. The company predicts, “Legislation targeting forced labor practices is creating compliance challenges, particularly for industries reliant on commodities like palm oil and vanilla, which are sourced from countries with weak labor protections.”
● Value at Risk. Moody’s analysts explain, “Supply chain executives have long pushed for a way to quantitatively measure the impact of different issues and crises on the company’s performance. It’s been a long-standing gap, but data availability, new technology (including GenAI) and advances in supplier risk assessments will make it easier to size up problems before they fully materialize. Value at Risk calculations can help organizations determine whether their risk mitigation strategies represent value for money when compared to the potential revenues losses in the event of a supply chain disruption.”
● Black Dragons. Historically, unanticipated supply chain events have fallen under the title of “black swans.” In these darker times, it’s perhaps more appropriate to call them black dragons. An interesting article in Politico looks at some explosive potential scenarios which could truly upend 2025. Some of those black dragon events include: An infectious disease outbreak in a small rural community; the U.S. and China negotiating a compromise; white supremacist groups and vigilante groups creating civil unrest; a credible challenger arising to Putin’s rule; real movement towards a two-state solution in the Middle East; and a market crash leading to global panic.[8] I suggest you read the entire article to learn more about other possible black dragon events.
Concluding Thoughts
Resilinc analysts report that overall disruptions to global supply chains increased 38% last year from the previous year. The top five disruptions for 2024 included: Factory fires; labor disruption; business sales; leadership transition; and mergers & acquisitions.[9] All of those “routine” risks will continue to disrupt supply chains. Preparations for routine and unexpected disruptions are key to becoming more resilient. Logistician Rob O’Byrne observes, “A truly resilient supply chain is a combination of visibility (knowing what’s happening across your entire network), flexibility (having multiple options when things go wrong), and adaptability (being able to pivot quickly when circumstances change). It’s about building relationships with suppliers that go deeper than just transactions, creating backup plans that you hopefully won’t need, and using technology to spot potential problems before they become crises.”[10] Risk management is an essential capability for any organization hoping to succeed in a volatile world.
Footnotes
[1] Online Staff, “Report highlights top risks to global supply chain in 2025,” Inside Logistics, 9 January 2025.
[2] CNW Group, “Global Supply Chains Forced to Change Rapidly As World Trade Enters New Era According to Economist Impact and DP World,” Yahoo Finance, 20 January 2025.
[3] Ezra Klein, “‘Now Is the Time of Monsters’,” The New York Times, 12 January 2025.
[4] Inside Logistics, op. cit.
[5] Sam Meredith, “Conflict, extreme weather and disinformation top global risks in 2025, Davos survey says,” CNBC, 15 January 2025.
[6] Kitty Wheeler, “How Supply Chain Cyber Threats Cost The Global Economy,” Cyber Magazine, 21 January 2025.
[7] Staff, “Top 3 supply chain risk-related trends for 2025,” Moody’s, 4 December 2024.
[8] Staff, “The Incredible, World-Altering ‘Black Swan’ Events That Could Upend Life in 2025,” Politico, 3 January 2025.
[9] Resilinc, “Global Supply Chains See Nearly 40% Annual Increase in Disruptions,” GlobeNewswire, 21 January 2025.
[10] Rob O’Byrne, “How to Make Your Supply Chain More Resilient,” Logistics Bureau, 17 January 2025.
