A beginner’s guide to geopolitics for procurement professionals

Geopolitics is procurement’s problem. Procurement professionals must understand what it means for their company and its supply chains.

We live in a volatile world, with wars and new political crises emerging constantly. These global events can seem remote, but it doesn’t take long for them to have an impact on procurement and supply professionals. Supply chains can be quickly disrupted by events such as the conflict in the Middle East or the tariffs that the Trump administration began introducing in 2025. 

Senior procurement and supply chain professionals and CPOs will be thinking about these issues daily, but the responsibility for understanding the potential impact of global events doesn’t lie solely with them. All procurement and supply professionals, whatever their level, should be monitoring them and weighing up their possible effects. 

Understanding geopolitics is everyone’s responsibility. 

What is geopolitics? 

Let’s start with some definitions. 

Geopolitics is about relations between nations. And also how geography – climate, topography, land borders and access to the sea – interacts with political actions. Geopolitical risks are the forces or events that can disrupt global stability and economic progress, affecting countries, regions, industries and companies.   

The situation in the Middle East in early 2026 is a case study in geopolitical supply chain risk. The conflict has (at the time of writing) led to the near-closure of the Strait of Hormuz - the narrow waterway located between Iran, the United Arab Emirates (UAE) and Oman - which is a vital global shipping route. Roughly 20% of the world's oil and liquefied natural gas usually passes through the Strait - any closure significantly impacts delivery and prices of energy supplies as well as many other commodities. This all has a direct impact on procurement, from sourcing decisions to supplier price increases, contracts and cost strategies. 

Other risks include tensions between China and the US, regional wars or conflicts, energy security and the price of oil, political instability, climate change, debt crises, migration and even demographic pressures.

Our Global State of Procurement and Supply report 2025 and regular CIPS Pulse surveys offer more detail on the risks to monitor.

It is the task of governments and businesses to attempt to anticipate, manage and navigate these risks. And in an era of long, international supply chains, this places procurement professionals on the frontline. It’s not that you’re expected to predict the future, but that you should be able to anticipate possible scenarios and have robust plans in place to cope.  

Crises are everywhere

Donald Trump’s re-election as US president has had wide ramifications for geopolitics, trade issues and supply chains. Notwithstanding the current conflict in Iran, his tariff policies have caused disruption to the global supply chain status quo. Industries like the automotive sector and commodities such as steel and aluminium have been particularly affected, as we heard from CIPS global economist John Glen on the CIPS Futures podcast in February. 

Russia’s 2022 invasion of Ukraine caused major disruptions to energy supplies, increased NATO-Russia tensions, and has had significant effects on global food security due to Ukraine’s grain exports. The geopolitical risk consultant Charles Hecker discussed these issues in detail on a CIPS Futures podcast. Gas prices spiked in Europe, as did the cost of grain to nations around the world, and the conflict also impacted supply chains, mostly shifting them eastwards, towards China.

Warring Middle Eastern nations have also had a destabilising effect on trade and supply chains. Yemeni Houthi attacks on shipping in the Red Sea in late 2023 and 2024, for example, caused vessels to travel an additional 4,000 miles around the Cape of Good Hope. This costs more, in terms of fuel, adds time and both ultimately make goods more expensive.

Around 80% of all goods are transported by sea, so it matters. 

Many governments and companies have expressed concerns over China-Taiwan-US relations due to China’s claim over Taiwan and Taiwan’s position as a leading semiconductor manufacturer. Wider territorial disputes in the South China Sea are something to keep an eye on, too, not least as global trade increasingly pivots towards China.

These aren’t the only geopolitical issues going on in the wider world. There is tension on the Korean Peninsula, in Libya, Afghanistan, Central America, Venezuela, and multiple challenges around the Horn of Africa, not least Somalia, Eritrea and Sudan. There is also potential for greater tension in the Arctic region, with melting ice caps opening up new shipping routes and access to oil and gas resources, leading to competition among the US, Russia, Canada, and other Arctic nations. Greenland has been at the centre of this debate.

Which brings us on to climate, the environment and sustainability. While arguably not strictly geopolitical issues, they are politicised by many leaders, and governments, and they will undoubtedly continue to rise up agendas over the coming decades.

Why is geopolitics procurement’s problem? 

So that’s the big picture. As a procurement professional, it’s your job to understand your company’s supply chains and ask yourself: where are goods, and their components, manufactured? How and through where are they transported? And what are the potential pinch points, such as that’s fuel prices, shipping routes, regional tensions, neighbourly disputes, piracy, sanctions, climate or sustainability matters? Charles Hecker encourages procurement and supply professionals to have an “emerging risk mindset”.

Also, it’s about the indirect, ripple effects. When Russia invaded Ukraine, for example, nations in Europe, the US and other imposed sanctions that impacted supply chains. Iran has for a long time been under a heavy sanctions regime. The US and China have been engaged in a tit-for-tat battle of sanctions and tariffs. It all distorts trade and supply chains and poses challenges for procurement teams. But that’s procurement.  

Smart companies have plans in place to counter any problems and hopefully stop them becoming overwhelming. That means alternative suppliers, if possible, can include the hedging of fuels, or keeping stockpiles of critical materials. Most if not all large companies employ risk intelligence analysts to study and weigh up risks. Or they buy in so-called intelligence, in the form of reports or regular updates, from expert providers. And all industries have specific trade publications catering to the sector and looking at risks.

Useful resources for procurement 

For young procurement professionals, there is plenty of information out there. A good place to start is The Economist magazine. Well written and easy to digest, it covers a wide range of geopolitical matters and produces special reports on sectors, politics or trade. Beyond that, the Financial Times is also strong on international business and trade. And if your company sources goods from, say, Japan, it might also be useful to get into the habit of reading its English-language business publications which will flag up issues before they reach UK news. 

Note: This article was originally published in November 2024. It has since been updated to reflect more recent events.