CSCOs Must Strengthen Risk Management Amid Global Tariff Uncertainty

Chief supply chain officers have become accustomed to uncertainty, and 2025 is expected to be no different, especially as companies brace for the unpredictability of tariffs and potential market fluctuations.

In this climate, CSCOs need to find effective ways to enhance their organizations’ responsiveness and, when possible, gain a competitive edge in the shifting trade environment.

It’s critical to have a strong risk-management strategy in place. Yet confusion over the meaning of “resilience” creates a challenge for many organizations. Resources are often overly concentrated on less critical areas, leaving essential components exposed and impacting profitability.

In a recent Gartner survey, 82% of supply chain leaders indicated that resources meant for proactive risk mitigation, including resilience, were directed toward the wrong risks. This misallocation was linked to an 18% decrease in profitability, according to survey respondents.

Many organizations are grappling with the concept of resilience, often treating it as a business outcome rather than a capability that helps the business ensure that it can profitably meet demand, despite disruptions. To address confusion over resilience, maximize the benefits of risk management investments, and prepare for uncertainty, CSCOs should focus on the following three actions.

Prioritize business objectives for risk management. According to Gartner research, 68% of supply chain leaders used just half of the resources set aside for addressing disruptions in the past year, suggesting overpreparation at best, or protection from the wrong risks at worst.

Organizations need to establish a flexible risk-management framework that can adapt to changes in business priorities, and focus on areas with the most significant impact on success.

A good starting point is to conduct a cost-benefit analysis, whereby organizations can weigh the potential impact of risks against the cost of mitigation strategies. Additionally, by regularly updating the risk register in line with current business objectives, leaders can help maintain alignment and ensure that risk management efforts remain relevant and effective.

Identify and address risk gaps. By understanding where current mitigations fall short, organizations can prioritize investments that protect critical business objectives. This involves evaluating existing risk controls and assessing their effectiveness in relation to the organization’s risk appetite. Without clarity on this, enterprises may incorrectly prioritize risks, leading to over- or under-preparation.

Organizations should engage in open dialogue with key stakeholders to establish a clear and shared understanding of risk appetite. The CSCO should ask: “Are we comfortable with the risks we’re taking, the protection we get from the mitigations we have in place, and the cost of those mitigations?”

Use the risk-appetite assessment to prioritize and assess resilience investments, then establish service-level agreements with affiliated parts of the business impacted by supply chain risk.

Test response plans. Resilience as a capability is often underutilized because frontline and operational staff are disconnected from resilience resources during disruptions.

On the flip side, when response teams are connected to proactive mitigations (such as resilience, visibility and agility), operational performance improves by 6% relative to expectations. The approach limits cost increases by up to 33%, reducing total cost of ownership due to disruption to 7%, as compared to an average increase of 40%.

Organizations should develop and test plans for ensuring that response teams have priority access to resilience resources. In the process, they can identify weaknesses in the plans and make necessary adjustments before a real crisis occurs.

This proactive approach not only improves operational performance, but also limits cost increases associated with disruptions, ultimately reducing the total cost of ownership due to unexpected events.

By taking steps to define resilience in their organizations and put it in the context of strategy and risk tolerance, CSCOs will be better equipped to respond to uncertainty.

Suzie Petr…