Analysing the Risks of Business Interruption Amidst Shifting Geopolitical Conditions

Throughout 2025, complex global environments marked by geopolitical tensions, trade uncertainties and low levels of economic growth have created challenges and uncertainty for Nordic businesses.

From disruptions in the Strait of Hormuz affecting crude oil prices to shipping route diversions around the Cape of Good Hope due to Red Sea tensions, geopolitical conflicts generate multi-layered consequences that continually impact global businesses regardless of their size and sector.

The challenge for businesses lies in understanding how these wider global events translate into local business interruption and supply chain disruption risks, and more importantly, how to build resilience while maintaining competitive advantage in an increasingly uncertain world.

Key insights

Red Sea tensions have diverted shipping vessels to a longer route, increasing transit times and operational costs.
State-based armed conflict has emerged as one of the most pressing geopolitical risks in 2025, directly threatening global trade routes and business operations.
Cyber-attacks pose a threat to business continuity across the Nordics with nearly 3,500 phishing attacks recorded in 2024¹. The rising trend in state-sponsored cyber threats amid hybrid warfare tactics, makes it one of the key concerns for businesses in near future.
Nordic businesses are now more likely to monitor the financial costs of supply chain disruptions and are leaning more towards insurance to cover such losses. As a result, the insurance uptake against major supply chain disruptions rose from 37.4% in 2023 to 46.7% over the past 12 months².

Geopolitical factors contributing to risk of business interruption

Armed conflict, sabotage and trade route disruptions

State-based armed conflict, including proxy wars and civil wars, represents the most pressing geopolitical risk for 2025 according to the World Economic Forum. The conflict in Ukraine has had direct implications for Nordic energy markets and supply chains. Similarly, tensions in the Middle East continue to influence global energy prices and disrupt shipping routes, whilst the ongoing US-China trade tensions create uncertainty for most global businesses.

Supply chain disruptions

Largely depending on import and export, Nordic companies remain vulnerable to global-scale supply chain disruptions. For example, during the 2020-2022 global semiconductor shortage, the automotive, healthcare and consumer electronics sectors in this region experienced significant production delays and increased costs. COVID-19 disruptions were the primary accelerant, but bottlenecks tied to cross-border tensions in Taiwan— which produces over 90% of the world's most advanced semiconductors — along with trade restrictions and supply chain vulnerabilities, contributed to the broad and severe shortages experienced.

Cyber warfare and digital infrastructure threats

Cyber threats now rank among the primary risks to business continuity as organisations depend heavily on digital systems for essential operations. Nordic businesses experienced almost 3,500 phishing attacks in 2024. The Information Services sector emerged as the most vulnerable industry, experiencing nearly one-third of the total phishing attempts1. State-sponsored cyber-attacks, specifically targeting logistics networks and creating digital vulnerabilities across the global freight systems is yet another critical cause for business interruption. Several businesses relying on operational technology (OT) face challenges as legacy systems become costly to upgrade, whilst the OT landscape grows increasingly interconnected.

"State-sponsored attacks are on the rise, and given the interconnected nature of global business, they have the potential to cause disruption and trigger ripple effects if a key supplier or digital service provider is affected. This creates scenarios where businesses may experience interruptions even without being directly targeted, simply because they rely on systems or partners that have been compromised"

Aldo Borsani, Head of Cyber & Financial Lines Europe

Impact on Nordic businesses

Increased freight costs and transit times

Trade route diversions, particularly those caused by geopolitical tensions, have significantly impacted Nordic businesses by increasing transportation costs and extending delivery timelines. For instance, rerouting vessels around the Cape of Good Hope due to Red Sea tensions has added weeks to shipping schedules, disrupting just-in-time inventory systems and creating cash flow challenges for businesses reliant on timely deliveries. These diversions also lead to higher fuel costs and increased freight rates, which are often passed down the supply chain, further straining profit margins for Nordic exporters.

Operational delays and reduced margins for manufacturers

Global supply chain vulnerabilities create cascading consequences for manufacturers, especially those reliant on imported parts or technology to sustain production processes. Disruptions in the availability of advanced equipment or critical components can lead to operational delays, forcing companies to idle assembly lines while bearing fixed costs that erode profit margins. Further, identifying viable alternatives to diversify the supply chain has become more expensive amidst geopolitical tensions.

Significant losses following a cyber attack

Cyberattacks create substantial financial consequences that extend beyond immediate response costs and ransom payments. Nordic enterprises face prolonged business interruption periods, regulatory fines and legal liabilities. Such attacks disrupt daily operations through forced system shutdowns, necessitating crucial system upgrades. For sectors such as retail, fintech, and healthcare, protecting their customer data is crucial to keeping their trust intact.

Energy supply disruptions

Energy supply disruptions create business interruption through operational uncertainty, temporary closures and expensive alternative sourcing. One example is the Nord Stream pipeline attack that spiked European gas prices by 19% with a sustained 6% increase, straining energy budgets for businesses and households³.

"Geopolitical conflict in the Red Sea has caused significant disruption to global maritime trade. Higher war risk premiums, expanding high-risk zones, and in some cases cover not being available if there are historical links to parties taking part in the conflict. This forces shipping companies to reroute vessels around the Cape of Good Hope, leading to increase transit time, higher operating costs, and a general increase in supply chain costs and delays."

Kristine Nicolaysen, Insurance Broker, Marine

Mitigation strategies to protect business operations

Enhanced insurance coverage and risk transfer

The rise in insurance uptake against supply chain disruptions reflects growing recognition that traditional risk management approaches require reinforcement.

Nordic businesses are implementing insurance strategies, when possible, to transfer multiple sources of business interruption exposures. This includes coverage for supplier failures, cyber-attacks, natural disasters and specialist policies for geopolitical risk and insurance.

Supply chain diversification and regionalisation

In addition to sourcing insurance, companies are investing in building more robust supply chains in several ways. Firms are moving away from lean manufacturing and are being over-reliant on single suppliers. This shift away from 'just in time' manufacturing to a 'just in case' posture includes diversifying across suppliers and regions as well as maintaining stockpiles where steady supplies of materials and components are less certain. For Nordic businesses, the trend toward regionalisation — or onshoring — can provide significant advantages by reducing dependency on volatile global supply chains while accessing broader European markets.

Supplier relationship management

Third-party failures remain the most frequent reason for supply chain disruption, affecting 43.6% of organisations². This highlights the importance of robust supplier relationship management and due diligence across multiple tiers of the supply chain.

Sharing data among stakeholders, including suppliers, manufacturers and logistics providers, enhances tracking and demand forecasting, thereby reducing disruption risks. In order to avoid upcoming disruptions, businesses can actively reinforce credit control and continuously update their risk assessments.

Technology and data visibility

Investing in real-time data visibility allows swift responses to changing conditions. Supply chain officers and logistics managers may prioritise analysing real-time data dynamically to support immediate decision-making.

Another vital step is to establish clear governance structures and defined roles to ensure that data-based decisions can be implemented efficiently when disruptions occur.

Scenario planning and contingency preparation

Regional enterprises may develop holistic scenario planning that considers different potential outcomes, from short-term supply disruptions to fundamental shifts in trade conditions.

Effective scenario planning requires businesses to:

Map their entire supply chain network and identify critical dependencies
Assess the potential business impact of various disruption scenarios
Develop alternative supplier relationships and backup plans
Review and update customs processes and compliance requirements
Evaluate pricing strategies and contract terms regularly

Sources

¹"Nordic Threat Landscape Report 2024: Ransomware, Phishing, and Dark Web Insights," SOC Radar, 3 December 2024.

²"Latest BCI Report Reveals Escalating Supply Chain Disruptions Drive Increased Tier Mapping and Insurance Uptake," BCI, 2 October 2024.

³Fleming, Sean. "International Impacts of the Nord Stream Leaks," GlobalEDGE, 10 Dec 2022.