Companies are reshaping their supply chains to withstand a more volatile world. Resilience strategies challenge leaders to navigate the trade-offs between "just-in-time" efficiencies and "just-in-case" contingencies.
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Key insights

  • After decades of optimizing cost and speed, organizations are now reshaping their supply chains in response to a broad rebalancing of global trade.
  • The closure of the Strait of Hormuz is a more recent reminder of how geopolitical risks can impact marine chokepoints and disrupt the flow of global trade.
  • Reshoring has become a dominant strategy as leaders rebalance efficiency with better security and control.
  • Businesses are diversifying, stockpiling goods and developing alternative routes to avoid common trade-route chokepoints.
  • Supply chain strategies turn volatility into opportunity and mitigate disruption, but operating costs grow with each layer of redundancy.

Geoeconomic fragmentation: What's prompted the re-engineering of global supply chains?

Among the many forces shaping global commerce, none connects businesses more directly than the supply chain. For decades, global supply chains followed one organizing principle: efficiency. Companies pursued lower costs and faster production, creating vast networks that powered global growth.

But vulnerabilities were inevitably baked into such lean manufacturing models, fragilities that have become clear in recent years.

The closure of the Strait of Hormuz in March 2026 is a more recent reminder of how geopolitical risks can impact marine chokepoints and disrupt the flow of global trade. The Strait is a critical passage for 20% of the global seaborne oil supply.

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Geopolitics is no longer a background condition for business; it's a core strategic variable that shapes risk, resilience and long-term value.
J.D. Crouch, managing director, Global Strategy, Gallagher

Currently, geopolitical risk, tariff and trade uncertainty, and the rising cost of materials top the list of concerns for global business leaders, according to Gallagher's 2026 Supply Chain risk research. As such, they are taking bold steps to mitigate these exposures and become more resilient and confident to face more uncertainty ahead.

"Organizations are more cognizant of their exposure to suppliers located in regions marked by geopolitical uncertainty," explains Michael Burg, executive vice president and managing director, Manufacturing practice at Gallagher US. "This awareness is crucial, as it allows companies to identify risks and take steps to address them."

Despite the attractions of globalization and the ability to tap into lower labor costs in other markets, seven in 10 global businesses are now adopting reshoring strategies to optimize, diversify and "politically de-risk" supply chains.

Multinational organizations are reassessing how and where they operate.1 Their supply chain transformation starts by reducing their long-standing over-reliance on outsourcing by building more regionally rooted partnerships to navigate evolving alliances and policy pressures.

The shift reflects a broader, ongoing realignment in which governments re-evaluate relationships, balance competing power blocks and respond to rising tensions across trade, tariffs and technology. These dynamics and scenario analysis are shaping business and national-level risk perceptions and complicating corporate decision-making.

"Geopolitics is no longer a background condition for business; it's a core strategic variable that shapes risk, resilience and long-term value. Treating it as a structural condition of the operating environment, rather than an episodic challenge, is essential for effective decision-making," adds J.D. Crouch, managing director for Global Strategy, Gallagher.

With nearly nine in 10 companies reporting they experienced supply chain losses in the past year, businesses are adapting to protect their operations, adding in contingencies, redundancies and holding on to additional stock.

These moves for supply chain contingency planning introduce inherent cost pressures, forcing leaders to navigate the trade‑off between protecting balance sheets in the long term and preserving some of the efficiencies of the globalized era.

"Supply chain issues sit at the center of a pyramid of risks. Beneath them lie the events that trigger disruption," explains Adam Carrier, head of consulting at AnotherDay, a Gallagher company.

"Since global interdependence peaked in 2019, we haven't seen a collapse, but a steady reconfiguration. The real challenge for businesses is not just knowing who their suppliers are but understanding where their networks operate and what risk events could compromise them."

Reshaping supply chains: Strategies for resilience

Supply chains are being reshaped by a convergence of geopolitical, economic and technological forces. Diversifying trade partners through friendshoring, onshoring and nearshoring has become a central resilience strategy for business leaders.

Together, these approaches reflect a shift away from a single global rulebook toward a landscape shaped by regional alliances and more transactional, politically informed partnerships.

While businesses face rising challenges — greater uncertainty, increased complexity, trade-offs in costs and uneven access to technology — onshoring and nearshoring offer control and proximity, and friendshoring leverages shared allegiances.

These supply chain optimization strategies aim to reduce exposure to geopolitical shocks, rising material costs and tariff volatility.

At the same time, some governments are adopting protectionist strategies as they compete for critical resources, using domestic subsidies and targeted tariffs to safeguard strategic industries. For business leaders, these strategies create an additional level of uncertainty: In the context of fragmentation, long-standing sourcing relationships can be disrupted overnight. These pressures are driving companies to rethink their operating footprints.

"Expanding your supplier network is essential," says Brian Cooper, senior managing director of the US National Construction practice, Gallagher. "We advise construction firms to have a clear view of where their materials originate and to broaden their supplier mix accordingly. In many cases, adding more domestic suppliers can reduce the risks, delays and tariffs associated with importing."

Companies are responding to tariff uncertainty in different ways. Some are delaying investments until policies stabilize, while others are moving quickly to build buffers. Three in five firms report that they're accelerating decisions by stockpiling goods ahead of expected tariff changes.

"We're seeing manufacturers reassess their geographic footprint," adds Burg. "Whether they planned for tariffs in advance or reacted afterward, many are now investing in the US or nearby markets rather than relying as heavily on China and Southeast Asia as they did years before.

"Balancing cost and benefit has always been difficult in supply chain strategy," he continues. "Production moved offshore for good reason. Bringing it back to the US, for example, may simplify some risks, but it's not always economically viable. The challenge is finding the right balance between efficiency and simplification."

What business leaders are doing to manage supply chain disruptions

The decision challenge: Complexity, trade‑offs and unintended consequences

Many of the factors pushing companies to rethink long‑standing sourcing relationships are also making decision-making harder. Trade policy is reshaping global supply chains, and related changes are prompting pivots, such as building short-term inventory buffers.

Leaders must make choices with imperfect information, shifting constraints and competing economic pressures. Supply chain managers may find they're swapping one exposure for another — reducing potential for geopolitical-led disruptions but facing more delays due to a shortage of truck drivers, for instance.

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The central question for business leaders is how much diversification is enough to improve resilience without eroding margins.

Weather- and climate‑driven disruptions add further complexity. Trade networks are increasingly planning around canal closures and port congestion, preassigning alternative routes. Globally, aging infrastructure is ill equipped to handle modern climate conditions, and the evolving fuel needs of marine vessels.

"Ports are often at the front lines of climate risk," says Steve Bowen, chief science officer, Gallagher Re. "We are seeing increasing impacts to aging infrastructure that wasn't built to comfortably withstand more volatile future climate conditions."

Friendshoring ambiguity

As disruptions have multiplied, the most forward-looking businesses have shifted from reacting to actively reinventing, strengthening their networks with broader supplier bases and deeper partnerships.

While friendshoring offers political and economic alignment along the supply chain, "friendly" partners carry their own risks, such as capacity constraints, infrastructure gaps or data governance weaknesses. Thus, partners may be politically aligned but not always operationally reliable.

Finding the right balance between adequate diversification of partners without harming the bottom line remains an ongoing tension in executing a friendshoring strategy. In sectors such as manufacturing, onshoring production can mean losing access to low-cost labor. Some of the cost pressure can be offset, to some extent, through efficiency gains from investing in automation.

The central question for business leaders is how much diversification is enough to improve resilience without eroding margins.

New risk vectors

Diversified sourcing dampens the impact of exporter-specific shocks and improves resilience to tariff and freight volatility. However, shifting production to new inland corridors reshapes the supply chain risk profile.

With nearshoring, for example, exposure to cargo theft — one of the top risks organizations anticipate in the next five years — can increase significantly. One-third of business leaders cite cargo crime and physical-security risks as concerns for both the near and longer term.

Geopolitical volatility and inadequate or aging infrastructure are other sources of risk for companies re-engineering their primary trade routes. The predictability of inland transportation corridors may be just as prone to bottlenecks as marine routes.

Domestic ripple effects

Onshoring and nearshoring can attract jobs and investment, with the impact extending far beyond the production floor. However, human-capital challenges can pose barriers; access and quality of the local workforce still drive investment in new markets.

Notably, one in three businesses report that access to skilled labor is the primary factor influencing their decision to relocate.

Specialist skills and technologies are difficult to replicate. The semiconductor sector in Taiwan, for instance, still produces 90% of the world's most advanced chips, despite efforts in recent years to de-risk. Major projects are underway to establish onshore facilities in the US, such as in the Nevada Desert, but it can take several years for new fabrication plants to come online.

Turning volatility into advantage

In today's polycrisis environment, global businesses operate under a volatile backdrop. Leaders are navigating geopolitical and geoeconomic fragmentation, changing trade rules, climate-driven disruption and mounting cost pressures — all while reshaping supply chains built for a different era.

Business leaders agree: The well-known model of relying on long, globally optimized networks is no longer enough. Resilience has no single formula. To adapt, organizations are leaning on a mix of reshoring, supplier diversification, buffer strategies and targeted risk transfer to future-proof their value chain.

In some industries, where competition for critical resources and technologies continues to intensify, this scenario is even prompting vertical integration to secure future supplies. As such, one of the biggest future threats for many companies is supplier consolidation, resulting in fewer options.

Resilience is about calibration. Having access to data to better map the supply chain — and overlay logistics, geopolitical and peril-based insights — can help companies make better decisions and ensure that every added redundancy earns its place.

"COVID taught companies the importance of pivoting quickly — not just to protect efficiency, but to preserve utilization," says Chris Demetroulis, managing director of the Transportation and Logistics practice at Gallagher. "That muscle memory now shapes how leaders think about sudden change and mitigation.

"Some companies face higher costs in one area but offset them in others," he adds. "It ultimately comes down to each company's global supply chain model and how well they adapt. Those that approach volatility not just as a threat, but as an opportunity to rethink and rebuild, are the ones that move ahead."

Business leaders know they can't eliminate risk, but they can redistribute it. They can diversify suppliers, shorten networks, strengthen regional partnerships and invest in digital tools, like AI in supply chain management, that improve visibility and speed. They can also select business partners that are better aligned to their risk appetite, not just their cost targets.

"For corporate boards and business leaders, insurance must evolve from being a backward-looking financial hedge to a forward-looking strategic tool for resilience," adds Crouch. "Evaluating insurers on their ability to anticipate geopolitical volatility and model systemic disruption is now critical in navigating an increasingly complex global landscape."

Achieving greater diversification will help businesses mitigate the risk of supply chain disruption now and in the future. It's a delicate balancing act, and risk and insurance advisers play a critical role. Brokers are uniquely positioned to provide insights and supply chain risk management solutions that support business leaders as they make decisions to strengthen their supply chain resilience while considering potential trade-offs.

Published March 2026

Sources

1"2026 Edelman Trust Barometer," Edelman, accessed 9 Feb 2026.