Supply chain resilience starts with financial resilience

For decades, many organizations built their global operations around a core assumption: global trade would remain open and predictable. In this relatively frictionless world, companies concentrated production in the most cost-effective locations and optimized their supply chains for just-in-time delivery.

Today, that core assumption is under pressure and global trade is reconfiguring at speed. Governments are taking a more interventionist approach to trade and industry. And geopolitical tensions, concerns about national ‘economic security’ and recurring global supply chain disruptions are reshaping international commerce. Tariffs are just one sign of this shift.

"Tariffs are a very visible and emotive single policy tool," says James Wang, head of Macro at U.S. Bank. "But they're only one element of a broader structural shift: governments are increasingly using trade policy to advance economic and national security objectives."

For business leaders, this means reconfiguring for the long term instead of responding to near-term volatility. In 2025, research by The Conference Board found that about 78% of CEOs planned to alter their supply chains over the next three to five years. But this era demands more than these strategic responses.

Geopolitical risk management is now a structural business priority.

Tariffs tend to grab attention. When trade and tariffs were getting media headlines in early 2025, FactSet’s analysis of S&P 500 earnings call transcripts from December 15, 2024, through March 6, 2025, found that the terms ‘tariff’ or ‘tariffs’ were mentioned by 259 companies. The previous peak in the past 10 years was 185 in the second quarter of 2018.

But getting caught up in individual tariff announcements can mean we miss the bigger picture. Tariffs are just one indicator of a more fundamental change: businesses are operating in an environment of greater geopolitical fragmentation and more active government intervention in trade, investment and technology.

That means executives need to treat geopolitical risk management as an ongoing discipline, planning for geopolitical uncertainty as a systemic feature of the operating environment instead of as a series of isolated shocks.

"The question is no longer whether another period of trade disruption will occur," says James Wang. "Organizations should assume that this is a long-term feature of the operating environment rather than a temporary interruption."

This changes the rules. Efficiency is no longer everything, and organizations are now thinking more about resilience.

Supply chain resilience starts with financial resilience.

Operational resilience is the first step in a broader supply chain resilience strategy. Many organizations are diversifying their suppliers and increasing sourcing flexibility, including regionalizing production so they are less dependent on a single market or single supplier. The spring 2026 CFO survey from U.S. Bank found that, among organizations with manufacturing operations overseas, 62% had nearshored manufacturing activity closer to the U.S., and 37% had reshored manufacturing back to the U.S. Just over half of the organizations (51%) with domestic or international supply chains had diversified suppliers across multiple countries.

But although these changes are central to supply chain risk management, they will also alter an organization’s financial foundations. When it redesigns its supply chain, it also needs to reconsider the financial assumptions that underpin it. More diversified suppliers and additional inventory typically require higher levels of working capital and longer cash conversion cycles. Greater funding flexibility also becomes more important. As a result, supply chain decisions are increasingly treasury decisions.

"Building resilience has clear financial implications," says James Wang. "As companies hold more inventory and diversify their supply chains, working capital becomes less predictable and liquidity planning becomes significantly more important."

Consider a manufacturer that decides to source components from multiple regions instead of relying on a single low-cost supplier. That step might reduce operational risk, but it can also increase inventory holdings, extend payment cycles, introduce new foreign exchange exposures and make cash flows more difficult to forecast. A supply chain that’s more resilient operationally can require greater financial flexibility to support it.

These changes are affecting the role of treasury. Beyond managing cash efficiently, treasury teams are increasingly helping organizations to assess the financial implications of supply chain resilience decisions. Senior executives need to understand how changes in sourcing strategies could affect liquidity requirements or cash conversion cycles, and make sure the organization can adjust its financing if conditions change rapidly.

In this context, liquidity is more than a defensive buffer: it also gives organizations the capacity to respond when opportunities – or disruptions – emerge. Businesses with stronger liquidity positions can absorb temporary increases in inventory and respond to sudden changes in supplier terms. They can also invest more quickly in new sourcing arrangements without putting unnecessary strain on day-to-day operations.

Organizations also need to think carefully about foreign exchange exposure as their supply chains become more geographically diverse. Expanding into new sourcing markets can introduce additional currency exposures and treasury complexity. Foreign currency accounts can help organizations manage these risks while simplifying working across borders.

Instead of treating operations and finance as separate disciplines, organizations should integrate their supply chain risk management strategies with treasury and financial planning. This will give their leadership teams a clearer understanding of operational risks and their implications for liquidity and funding requirements.

Supply chain risk management requires better decisions.

Building resilience is also about how quickly organizations can understand changing conditions, assess them and respond.

That begins with visibility. Executives will need to understand their supplier dependencies and how they intersect with working capital requirements and evolving geopolitical risks. Without timely and reliable information, they’re less able to identify an emerging vulnerability and respond to it before it becomes destructive.

As part of their supply chain risk management strategies, leading organizations are expanding their use of scenario planning and stress testing. This recognizes that we can’t predict every disruption – we can only prepare for a range of possible outcomes by developing contingency plans and decision frameworks in advance.

"The organizations that respond most effectively aren't necessarily those that predict every disruption," says James Wang. "They're the ones that have visibility, prepare multiple scenarios and already have playbooks ready to execute."

Turning those plans into action demands coordination across the business. Supply chain, finance, treasury and executive teams need a shared understanding of operational and financial risks so they aren’t assessing the implications of changing conditions in isolation.

So, the emphasis in international trade risk management is shifting from predicting disruption to building the capability to respond to it. Organizations that combine enhanced visibility with strategic decision-making can better navigate uncertainty while continuing to invest and grow.

Banking relationships are becoming more strategic.

As organizations strengthen supply chain resilience, financial flexibility and decision-making capabilities, many are also rethinking how they work with their banking partners.

Working capital solutions, foreign exchange capabilities and liquidity management are obviously critical. But in a more volatile environment, the value of a banking relationship goes further. In relatively stable markets, treasury teams might be tempted to engage with banking partners only when they need to execute a transaction or arrange financing. But that approach has to change in less predictable trade policy and foreign exchange markets.

"In a more uncertain environment, regular dialogue becomes much more valuable," says James Wang. "Organizations shouldn't wait until they need to execute a transaction. Ongoing conversations help treasury teams understand what’s changing in the market and what that could mean for their business."

That dialogue can help organizations anticipate emerging risks, understand how policy changes are affecting currencies and funding markets, and assess the potential implications for working capital, liquidity and financial planning before those changes affect operations.

As geopolitical fragmentation reshapes global commerce, financial resilience will increasingly depend on more than supply chain resilience and funding flexibility alone. Organizations will also need access to timely market insight and trusted partners that can help them navigate this increasingly unpredictable environment.

In an environment shaped by geopolitical uncertainty, shifting trade policy and more complex global supply chains, the right banking partner can help you anticipate risks and make more informed financial decisions. Connect with your U.S. Bank relationship manager to explore ways to strengthen financial resilience across your supply chain.