10 supply chain risk management strategies (for global SMEs)

Your supply chain needs to keep moving even when tariffs, exchange rate swings, and supplier fragility threaten to add unexpected costs or delays.

These supply chain risks can disrupt your business in a number of ways — some of which might surprise you: 

• Poor operational efficiency when supplies sit on a dock waiting for payment confirmation 
• Weaker supplier relationships when late payments signal you're not a reliable partner 
• Penalty fees when payments get delayed close to their due dates (which eats into your margins)

These immediate disruptions become even more costly when you're concentrated in specific areas. If your invoices are heavily weighted toward one currency pair, FX volatility can crush profitability overnight. If a single supplier or region handles most of your orders, one disruption cascades into missed deadlines and unhappy customers. 

In this guide, we'll walk through how to assess your current risk management gaps and share 10 practical risk mitigation strategies you can use to reduce that exposure. International payments are often where supply chain risk hits the hardest, so we’re placing extra emphasis on the financial side of risk management. 

What is supply chain risk management?

Supply chain risk management is the process of identifying, evaluating, and preparing for disruptions that can affect the flow of goods, payments, and supplier reliability. 

For Small & Medium Multinationals (SMMs) — internationally exposed SMEs trading across borders — risks often show up as supplier insolvency, late payments, delayed shipments, tariff shocks, or currency swings that change the true cost of every transaction. 

One key thing to keep in mind: effective supply chain risk management isn't about eliminating every possible threat. 

Instead, it's about building supply chain resilience so you can maintain business continuity even when volatility does hit (because some volatility is inevitable). In other words, reduce your risk exposure where you can and create a safety net for when disruptions do happen. 

A strong supply chain risk strategy blends operational factors like supplier diversification and continuity plans with financial factors like foreign currency risk management, cash flow protection, and a consistent, stable invoice payment process.

Why supply chain risk management matters for SMMs in global trade

So we know supply chain risk management protects your business operations when global volatility hits. Without it, supply chain issues can damage supplier relationships and create cost spikes that can wipe out entire quarters of work (and profits) in days. 

Drilling down further, the reasons for establishing sound supply chain risk management come down to three core areas: 

• Foreign currency volatility can quickly shift your P&L and budgets 

• Fragile suppliers can create domino effects that squeeze your operations 

• Geopolitical policies and decisions can reshape the global economy overnight 

Let's expand on each of these points further.

Currency volatility can quickly reshape costs 

The EUR/USD exchange rate swung nearly 10% in early 2025, instantly throwing import/export costs and budgets off track. When you're paying suppliers or collecting payments in foreign currencies, exchange rate swings like this can erase your margins in seconds. 

This kind of FX volatility shows why monitoring and actively managing your FX risk are crucial; if you're too heavily tied to a single currency pair — even if it's one of the most commonly used — you're at risk of swings like this. 

And these fluctuations most definitely aren't limited to major pairs like EUR/USD. Similar moves in GBP, JPY, CNY or any other currency you're working with can create the same financial risk across your supply chain when exchange rate fluctuations affect your operations. 

Supplier fragility creates domino effects across global chains 

Economic slowdowns put pressure on every link in your supply chain, and the numbers from 2025 show just how widespread this pressure can be. US GDP dropped 0.3% in Q1 while eurozone growth hit just 0.4%. During periods like this, even financially stable suppliers will face cost increases or reduced demand, leading to delays, shortages and higher prices for their partners. 

Geopolitical and trade policies drive sudden cost changes 

On "Liberation Day" in the US, the government announced widespread tariffs — including 46% for Vietnam, 32% for Indonesia, and 24% for Japan. This announcement immediately added massive pressure to long-standing supply chains globally. While these particular tariffs have since been suspended, the risk of sudden shifts like this remains. 

If you're entirely dependent on supply chains in a single region, you're at greater risk of falling victim to sudden global political climate changes. For example, if your entire manufacturing process is dependent on Vietnam, your production costs could've increased by 46% overnight. 

Beyond tariffs, other trade measures like export bans, sanctions, or shifting trade agreements can introduce the same kind of sudden cost spikes. Navigating global trade disruption isn’t easy and requires a deep understanding of how external supply chain risks like these can impact your global supply chain. 

How to conduct a basic supply chain risk assessment

Smart risk assessment starts with mapping what you've got now. You can't identify risks without knowing where your weak spots are — and most SMMs discover their risk exposure runs deeper than they initially expected.

We've found the best approach combines FX risk management with operational reviews. You need both sides to get the full picture. 

Review your dependence on single suppliers or regions 

Map your spend and order volume by supplier and country to reveal dangerous concentration. Note lead times and points of failure in production, components, or logistics across your supplier networks.

You're in safer territory when sourcing and spend are distributed across multiple qualified potential suppliers. Risk flags appear when one primary supplier or country dominates your orders, when you're dealing with long lead times, or when you've got few backup options. 

As our guide to navigating global trade disruption explains, even stable supply chain partners become vulnerable when they're handling too much of your volume. Supplier concentration leaves you exposed to their problems — financial troubles, capacity constraints, or regional disruptions that knock out your primary source. 

Check your exposure to FX volatility in payment flows 

High concentration in one currency pair means a single exchange rate move can impact most of your costs or revenues at once. Again, the euro moved nearly 10% against the dollar in 2025 — large currency swings happen fast and without warning. 

To put it simply, you're often safer with a more balanced currency mix across payment flows. When most of your international payments are tied to a single currency pair —  especially during periods of FX volatility like we're seeing now — you're FX risk levels are incredibly high.

If you aren't able to feasibly diversify the currency pairs you work with, you can still minimise your FX risk by using the right tools for the right job. For example, FX spot transactions are good when you need to make an immediate payment at current market rates. If you can plan payments weeks or months ahead of time, FX forward payment contracts let you lock in exchange rates now for future payments (protecting you from the kind of 10% swings we've seen recently). 

Analyse your liquidity position and receivables pressure 

Review Days Sales Outstanding (DSO) trends, cash conversion cycles, and the gap between customer and supplier payment terms. This exercise assesses whether you've got cash on hand to ride out unexpected challenges — major exchange rate swings, pricing shocks, supply chain issues, or global events that disrupt business operations. 

When your assets are too heavily tied up in accounts receivable and liquidity runs low, you'll struggle to navigate these hurdles. That means more risk across every aspect of your operations. Smart risk mitigation involves building contingency plans that help maintain business continuity even when cash is tight. 

Review your international payment infrastructure (an underestimated supplier risk factor) 

Most SMMs don't realise their payment setup (or lack thereof) can create supplier risk... until problems hit, that is. We've seen plenty of international businesses struggle because they were overly reliant on traditional banks and didn't have the proper risk mitigation tools.

To assess how open to risk your payments and cash flow management systems actually are, we'd recommend asking two questions: 

• How are invoices issued, approved and settled? 
• How is cash in foreign currencies handled in the business? 

If your invoicing process is inefficient or not well-documented, you'll likely experience payment delays and supply chain disruptions when suppliers lose confidence in your reliability. And if you don't have the proper tools on hand to manage cash and payments across multiple currencies, you'll end up paying far more in fees than you need to, and you'll be more vulnerable to the exchange rate swings we've talked about.

Your payments infrastructure needs to cover three core areas: 

• Multi-currency capability: A multi-currency account lets you hold, send and receive funds in multiple currencies, avoiding unnecessary conversions and extra costs 

• Risk management tools: Access to FX forward payment contracts protects you from currency swings on future payments 

• Fast, reliable payments: International business payments that move from point A to point B quickly and predictably keep supplier relationships strong 

When your payments are fast and fees stay predictable, suppliers trust you'll pay on time — and that trust keeps goods flowing even when markets get volatile. Your payment infrastructure directly impacts global supply chain stability.

10 strategies to manage supply chain risk

Now that you've mapped your risk exposure, here are 10 practical supply chain risk management strategies you may choose to adopt. These mitigation strategies focus mainly on the financial side, as this can make the biggest impact on supply chain resilience for SMMs.

1. Make payments in advance 

Paying suppliers ahead of schedule builds supplier trust and strengthens supplier relationships, showing you're a reliable partner even during volatile times.

Early payments can secure priority treatment on production slots or shipping capacity when demand gets tight. They also protect you from late fees or penalty charges that erode margins — small costs that add up fast when supply chain operations are stressed.

The downside? You're tying up cash sooner, so make sure to weigh liquidity needs before committing to consistent early payments. But when you can afford it, early payments create supply chain resilience by positioning you as a preferred customer.

2. Shorten contracts and keep renewal terms flexible 

Long-term supplier deals might look great on paper. But they can also trap you when conditions and exchange rates shift suddenly. If you've committed to a multi-year contract that doesn't account for such shifts and volatility, you could be left wondering how to get out of such a deal. 

Meanwhile, shorter contracts give you a chance to revise contract terms or exit if global conditions become less favourable or if the supplier's financial position or reliability weakens.

If you can, look to enter commitments with flexibility and friendly renewal terms. This gives you the stability of a long-term contract but the flexibility of a shorter contract. Renewal flexibility means you can renegotiate faster on pricing, terms, or delivery windows when markets move against you.

3. Use a multi-currency account to diversify your cash portfolio 

Holding funds across multiple currencies reduces your risk through basic diversification. That's why multi-currency accounts can make all the difference to your international payments infrastructure, as they become critical for helping your business manage risk.

Think of it like a digital wallet with pockets for each global currency you transact in. By keeping funds in the currencies you need most, you can avoid unnecessary conversion pay suppliers in their local currency and receive payments from customers in theirs. 

In the past, you'd need to open numerous foreign currency accounts with multiple traditional banks across the globe to diversify your cash holdings. Today, all you need is a single multi-currency account (that you can open in just a few minutes). 

With an iBanFirst multi-currency account, you can hold funds across 25+ currencies and manage your international payments and FX risk management from one simple yet powerful platform.

4. Protect profit margins with FX risk management tools 

FX volatility can hit supply chains in ways most people don't expect. One day, your supplier costs make sense. The next day, the same invoice amount costs 10% more because rates moved overnight.

With FX forward payment contracts, you can lock in exchange rates for future payments, protecting your SMM business from the kind of currency swings we've seen this year. With iBanFirst, you can access three types of payment contracts:

• Fixed forward payments: Lock in today's rate for a specific payment date in the future. Best when you know exactly when and how much you need to pay. 

• Flexible forward payments: Set a rate and timeframe to use it within, then draw down against it over time. Good when payment timing isn't certain or need to be spread over time. 

• Dynamic forward payments: Lock in a protection rate to secure your margins with the option to take advantage of the better rate if the market moves in your favour by settlement day. 

The right choice depends on your payment volumes, cash needs, and planning horizons. For SMMs, we see FX forward contracts as a must-have tool in your toolkit. Without them, you're fully at the mercy of the markets, relying entirely on FX spot payments. 

5. Maintain buffer stock and continuity plans 

Buffer stock and continuity plans aren't long-term fixes on their own, but they'll buy you time to respond when issues or delays pop up. The goal here is to prevent small disruptions from becoming major crises overnight.

• Buffer stock: If you can afford to tie up a bit of cash, having extra inventory cushions you against production delays or shipping bottlenecks. 

• Continuity planning: You could identify backup suppliers before you actually need them, for example. This way, if your primary suppliers run into issues, you're not scrambling to find alternatives while your operations stall out instantly.

Navigating global trade disruption becomes at least a little bit easier when you've mapped out your contingency plans ahead of time. Smart inventory management combined with supplier backups creates the breathing room you need for business continuity when markets turn volatile. 

6. Structure payment terms to preserve liquidity 

Liquidity is crucial when volatility hits. You need cash available to cover unexpected swings, expedite orders with backup suppliers, and so on. One of the best ways to improve your cash on hand is through negotiating favourable payment terms with your suppliers. The good news? There are plenty of levers you can pull to make it happen.

Here are some specific questions we'd recommend asking when negotiating payment terms with both suppliers and customers to maximise your liquidity:

Who pays transaction fees? 

Negotiate who pays the transfer fees upfront. You've got three options:

• BEN: The recipient covers all transaction fees 

• OUR: The sender covers all transaction fees 

• SHA: The costs are divided between the sender and the receiver 

Do your customers need to pay a deposit? 

Consider structuring contracts to include deposits from customers. If you start collecting 25-50% upfront, you could dramatically improve your cash flow and reduce the amount of assets you have sitting in accounts receivable. 

Do you need to pay your suppliers a deposit? 

If you can negotiate a smaller upfront deposit with your suppliers (or no deposit at all), that could mean more cash on hand for you. 

How long do your customers have to pay invoices? 

If you're issuing invoices to customers, you can use the payment due date to your advantage. Do customers need to pay invoices within 30 or 90 days? 

How long do you have to pay your supplier invoices? 

And what are your timeframes for paying supplier invoices? Could that 90 days be negotiable? 

In practice, the best approach here is to use each of these levers in your negotiations to find the right setup for your business, suppliers and customers. For example, if your goal is to increase the time you have to complete payments and maximise cash on hand, and you're comfortable paying a slight premium to get there, you could structure your payment terms as follows: 

• OUR fees: You'll pay all transaction fees. 

• 25% customer deposit: Your customers will pay 25% upfront. 

• 10% supplier deposit: You'll pay a 10% deposit upfront on new orders. 

• Net 30 payment terms for customers: Customers have 30 days to pay their invoices. 

• Net 90 payment terms for suppliers: You have 90 days to pay supplier invoices. 

This would give you more time to collect payments from your customers before any payments are due to your suppliers, meaning you keep more cash on hand for longer. Depending on the terms you negotiate with your customers, this could potentially push you into a negative cash conversion cycle where you're customers are paying in full before you actually need to pay your suppliers. 

7. Diversify suppliers and sourcing regions where possible 

Relying on a single supplier or country inevitably creates risk. It's an "all your eggs in one basket" scenario. If you're entirely dependent on one supplier, a 50% tariff that gets rolled out overnight will impact your production costs as much as your supplier.

If you can, try to diversify your supply chain network across multiple partners and regions. And stay on top of any potential alternatives you could pivot toward on short notice if needed.

Yes, this approach does add complexity. You'll have more relationships to manage, more contracts to negotiate, and different quality standards to monitor. But it also keeps your operations afloat if one supplier runs into issues or gets hit by regional disruptions.

8. Shift focus to resilient local and regional markets 

Finding the absolute lowest price supplier can feel like a huge win. But if your supply chain strategy is essentially "find the cheapest option that can do the job," you're setting yourself up for trouble.

Cost is only one variable. If the trade-off for lower prices is working with suppliers in higher-risk regions, that's a major consideration. Generally speaking, regions with stable economies, regulation and predictable demand will make your supply chain more resilient.

So consider whether you can shift even part of your supply chain to lower-risk regions. While it may increase your production costs, it will also reduce your exposure to volatility.

9. Strengthen transparency and trust with your suppliers 

Relationships matter in global trade. A healthy buyer-supplier relationship mostly comes down to trust. You have expectations for what makes a good supplier, just like they have certain criteria for trustworthy buyers. You want to be a buyer who consistently pays on time and keeps suppliers in the loop.

One clear path to building trust with your suppliers is payment visibility. Nobody wants to chase down payments or wonder if a transfer got lost somewhere in the maze of international payments.

With iBanFirst, SMMs can share real-time payment tracking links for most international payments with suppliers. This means your partners can see exactly when you sent the payment, which banks it's routing through, and when it'll arrive in their account.

10. Adopt a risk-aware culture across your business 

Supply chain risk management doesn't just live with your finance team. You need vigilance across your entire organisation — from operations and procurement to leadership.

Try to build a culture where everyone across the company understands what a high-risk supply scenario looks like and feels comfortable flagging potential risks before they hit. For example:

• An operations team may need to flag shipment delays or defects

• Procurement may hear suppliers mention capacity issues or rising costs 

• Sales may notice slower deal velocity or new customer objections

It all feeds into better risk management — but only if people actually share what they're seeing. That transparency we talked about with suppliers? The same principle applies internally. It can't be solely your (or your team's) responsibility to spot every potential supply chain issue.

How the right cross-border payment provider can help you manage supply chain risk 

An effective cross-border payment provider helps reduce supply chain risk by making international payments faster, more cost-effective and more predictable. 

Payment delays, hidden fees and currency swings can all undermine supplier trust and disrupt cash flow during volatile periods. That’s why you need a reliable, transparent and flexible payment infrastructure, as this keeps confidence high across the board.

Your suppliers gain payment certainty, and your team gains budget predictability. 

When you work with iBanFirst, you can: 

• Open a multi-currency account in minutes and hold funds across 25+ currencies 

• Pay suppliers in their local currency quickly and easily 

• Share real-time payment tracking links with partners so they see exactly when it was sent, which intermediaries are involved, and when it'll arrive 

• Access FX risk management tools, including fixed, flexible, and dynamic forward payment contracts

• Work with human FX experts who understand your unique cross-border needs 

Request an account with iBanFirst today or check out our interactive demo to see the platform in action for yourself.