KUALA LUMPUR (Jan 15): Supply chain visibility, diversification, cybersecurity, scenario planning, and trade agreement advocacy. These are the five measures a risk management expert said businesses could adopt to navigate the trade restriction-induced turbulence foreseen in the near term.
“The risks posed by economic fragmentation and protectionism are significant, but they’re not insurmountable,” Carolina Klint, chief commercial officer of Marsh Mclennan Europe, said at virtual press conference held in conjunction with the launch of the World Economic Forum’s (WEF) Global Risks Report 2025 in Davos, Switzerland.
Geoeconomic confrontation — sanctions, tariffs, and investment screenings — ranked third for the 2025 global risk landscape, only eclipsed by state-based armed conflict and extreme weather events. It jumped to ninth from 14th in the annual report's short-term (two years) risk outlook,
The report, based on surveys of over 900 experts and 11,000 business leaders worldwide, said the item’s rise reflects unease of the path ahead for global economic relations.
“According to Global Trade Alert, the number of harmful new policy interventions rose from 600 in 2017 to over 3,000 per year in 2022, 2023 and 2024 respectively. And, I don’t even want to guess where we’ll end up in 2025,” Klint said.
“We see new tariffs and trade restrictions that may disrupt supply chains even further, which will increase costs and delays and potentially result in lost contracts,” she added.
However, Klint noted that businesses employing proactive steps to ensure supply chain resilience, invest in cybersecurity and advocate for a more collaborative trade environment can aid in navigating these challenges.
She said businesses should invest in technologies that provide real-time visibility into the supply chain to identify potential disruptions early, and diversify supply bases to reduce over-reliance on any single country, or region to mitigate the impact of tariffs and trade restrictions and ensure continuity of supply.
Meanwhile, as governments continue to tighten regulations and restrictions on data flows, Klint said businesses will need to increase investment in cybersecurity.
She also recommended businesses engaging in scenario planning to assess the potential impact of various potential trade policy changes on their operations.
“And lastly, in this complex fragmented world, businesses have an opportunity to engage with policymakers to advocate for the revival of multilateral, regional and bilateral trade agreements.
“By promoting a more collaborative approach to trade, we can help reduce some of the fragmentation we see and foster a more stable economic environment,” she added.
The concerns over geoeconomic conflict illustrated in the WEF’s Global Risks Report 2025 and Klint’s measures to mitigate its impact come at a time when the US’ incoming Trump administration is threatening to unleash massive tariffs, including on goods imported from allies.
Meanwhile, the outgoing Biden administration recently imposed a round of restrictions on the export of advanced chip used in data centres to keep them out of the hands of China and Russia.