How Procurement Leaders Can Tackle Global Risks in 2025

Imagine a global playing field where geopolitical tensions, environmental challenges, and technological disruptions continuously reshape the rules of business. For procurement professionals, this is the pressing reality of their daily operations. In this high-stakes world of global procurement, the World Economic Forum’s (WEF) 20th Global Risks Report offers a strategic roadmap for navigating an increasingly complex landscape. To stay ahead, procurement leaders must address an interconnected set of risks and adopt forward-looking strategies.

 State-Based Armed Conflict: A Stark Reality

State-based armed conflict tops the list of global risks in the WEF’s 2025 report, with nearly a quarter of global experts identifying it as the most severe challenge. For procurement, this translates into disrupted trade routes, compromised critical resources, and destabilized regional supply networks. Mirek Dušek, Managing Director at the WEF, highlights, “Geopolitical tensions are escalating, global trust is eroding, and the climate crisis is putting unprecedented pressure on the international system.” These cascading effects directly impact supply chain operations, requiring procurement leaders to navigate both internal and external disruptions.

 Key Procurement Vulnerabilities Highlighted by the WEF

The 2025 report identifies three major vulnerabilities for procurement teams: strategic resource concentration, technological risks, and environmental pressures. Addressing these challenges is critical for operational resilience.

Strategic Resource Concentration

Competition for critical materials such as rare earth minerals and semiconductors has intensified. Passive sourcing is no longer viable. Procurement leaders must focus on supply chain visibility, strategic partnerships, and diversified supplier networks to mitigate bottlenecks.

Technological Risks

AI-driven tools are transforming procurement through advanced forecasting and risk assessment. However, these technologies bring challenges such as algorithmic bias, ethical concerns, and cybersecurity vulnerabilities. Leaders must implement robust risk mitigation strategies while maximizing the benefits of digital innovations.

Environmental Pressures

 Extreme weather events, biodiversity loss, and decarbonization regulations are becoming key concerns. Disruptions caused by natural disasters are more frequent, and procurement teams are now accountable for reducing carbon footprints and adopting sustainable practices. Carolina Klint, Chief Commercial Officer for Europe at Marsh McLennan, warns, “Protectionism and environmental risks are profoundly impacting stretched global supply chains.”

 The Cost of Inaction

Ignoring these vulnerabilities increases business risks exponentially. Escalating cyberattacks, stricter regulations, and supply chain disruptions can cripple operations. Klint adds, “By taking proactive steps to enhance supply chain resilience and invest in robust cybersecurity, businesses can better navigate growing complexities.” Procurement leaders must act swiftly to address these risks.

 The Procurement Imperative: Resilience Through Collaboration

Mark Elsner from the WEF emphasizes, “Interconnected crises demand coordinated, collective action.” For procurement professionals, this means:

Enhanced Stakeholder Dialogue

• Transparency and trust are essential. Procurement leaders should:
• Collaborate with suppliers to ensure ethical sourcing.
• Share real-time data to anticipate disruptions.
• Build trust through consistent, open communication.

Resilience-Building Tactics

  Procurement teams must:

• Diversify Supplier Bases: Avoid over-reliance on single suppliers or regions.
• Localize Critical Production: Reduce exposure to global trade route disruptions.
• Invest in Technology: Use AI-driven analytics for real-time risk insights.

Sustainable Practices

• Sustainability is an immediate priority. Leaders must:
• Embrace circular economies to reduce waste.
• Prioritize renewable energy in sourcing and production.
• Align strategies with global decarbonization standards.
• Technological Innovations: A Double-Edged Sword

While digital tools enhance efficiency, they introduce risks such as algorithmic bias and cybersecurity threats. To mitigate these risks, procurement leaders should:

• Establish ethical AI governance frameworks.
• Prioritize cybersecurity measures to safeguard data.
• Train teams to balance technology with human judgment.

 The Role of Regulations

Protectionist policies and regulatory changes add complexity to global supply chains. Advocacy for fair trade and proactive adaptation to regulations are essential. Aligning procurement strategies with emerging standards, such as carbon emission targets, allows businesses to comply and gain a competitive edge.

 The Case for Resilience

The WEF report reveals that 64% of respondents expect a fragmented global order by 2035. Peter Giger, Group Chief Risk Officer at Zurich Insurance Group, warns, “Surpassing the 1.5°C warming threshold marks a pivotal moment with profound implications.” While climate risks demand long-term action, immediate steps to build resilience are crucial.

 Turning Challenges into Opportunities

The interconnected risks of 2025—geopolitical tensions, environmental crises, and technological disruptions—require a paradigm shift. By embracing resilience, collaboration, and innovation, procurement leaders can not only mitigate risks but also uncover growth opportunities.

 Key Strategies for Success:

Enhanced Stakeholder Dialogue: Strengthen communication across the value chain for adaptive partnerships.

Resilience-Building Tactics: Diversify suppliers, localize production, and invest in risk monitoring technologies.

Sustainable Practices: Align procurement with global sustainability standards and consumer expectations.

 Conclusion: Adapt, Collaborate, Innovate

Procurement leaders must adapt to evolving realities, foster collaboration, and innovate for a resilient future. The challenges of 2025 require balancing immediate needs with long-term goals. By taking proactive steps, leaders can position themselves as strategic drivers of success in an unpredictable world.