War Risks for Importers & Exporters: How to Mitigate & Accelerate Through Them
By Joe Anderson, CPCU, ARM AFSB, CBRA
Principal & Fractional Chief Risk Officer
Global trade has always been exposed to global instability, but in recent years war risks have become a heightened concern for importers and exporters. Conflicts, sanctions, political tensions, and maritime disruptions can halt or delay shipments, freeze payments, damage cargo, or make entire markets inaccessible overnight. For companies that rely on international supply chains and overseas buyers, understanding these risks—and preparing for them—is essential for long-term resilience.
Understanding War Risks
War risks refer to losses or disruptions caused by armed conflict, military action, terrorism, or geopolitical tensions that affect trade routes, transportation infrastructure, financial systems, or destination markets.
As we speak, the Iran War is in full effect. Regardless of your personal opinions about the war and its merits, it is having a significant impact on international trade. Oil exports are reduced, gas prices are increased, and trade into that general region has been slowed or stopped. Another example is the ongoing conflict following the Russian invasion of Ukraine, which has significantly disrupted trade flows in Eastern Europe and global commodity markets. Similarly, maritime tensions affecting routes such as the Red Sea have forced many shipping companies to reroute vessels around the Cape of Good Hope, increasing transit times and freight costs.
These examples illustrate how quickly geopolitical developments can reshape international commerce.
The Main War Risks Importers and Exporters Face
1. Cargo Loss or Damage: Cargo shipments may be damaged or destroyed due to military activity, missile strikes, piracy, or terrorism in conflict zones. Even if the goods themselves are not targeted, they can be caught in collateral damage.
2. Shipping Route Disruptions: War can close ports, block canals, or make critical trade routes unsafe. Insurance premiums for ships entering high-risk zones can spike dramatically, sometimes leading carriers to suspend service altogether.
3. Payment and Financial Risks: Importers and exporters may face delayed or blocked payments if banking systems in the destination country collapse, or if international sanctions are imposed. For example, financial restrictions following the Russian invasion of Ukraine cut off several banks from the Society for Worldwide Interbank Financial Telecommunication network, making international payments extremely difficult.
4. Sanctions and Compliance Exposure: Governments may suddenly impose trade sanctions or export controls against certain countries, companies, or industries. Exporters who violate these restrictions, even unintentionally, can face heavy penalties.
5. Supply Chain Interruptions: Conflict in one region can disrupt raw materials, transportation networks, and manufacturing inputs globally. Exporters may struggle to fulfill orders if suppliers are located in affected regions.
Industries Most Exposed to War Risks
While all exporters face geopolitical risk, some sectors are particularly vulnerable:
Energy and natural resources
Agriculture and food commodities
Industrial equipment and machinery
Electronics and semiconductors
Automotive components
These industries often depend on long supply chains, maritime transport, and politically sensitive regions.
How Exporters Can Mitigate & Accelerate During Times of War
Despite the uncertainty of geopolitics, exporters have several strategies to reduce their exposure.
1. Identify the opportunities that war risks present to your company:
a. Can you purchase an impacted firm for pennies on the dollar?
b. Can you cement your most loyal supplier or client relationships by showing a level of support and care that is uncommon?
c. Can you expand to meet a new need created by the war risk exposures?
2. Purchase Comprehensive Insurance: Supply chain, cargo, war risk, foreign liability and property coverage, trade credit insurance and other considerations are all important in crafting a resilient approach to staying relevant in business during wars. A comprehensive review of exclusions and coverage extensions by a risk management professional is critical here. Businesses shipping through high-risk regions should confirm that their policies include these protections.
3. Strengthen Contractual Protections
Import and export contracts should include clauses that address geopolitical disruptions. These may include:
Force majeure provisions
Alternative shipping arrangements
Payment protections if delivery becomes impossible
Clear contractual language can prevent costly disputes if a conflict interrupts trade.
When is the last time you had your contracts reviewed by risk management professionals to determine where they need to tighten up, or flex for a new product, service, or relationship?
4. Diversify Markets and Supply Chains: Over-reliance on a single region or single supplier increases vulnerability. Importers and exporters can reduce risk by:
Expanding sales into multiple geographic markets
Sourcing materials from different regions, countries, and suppliers
Mapping out alternative shipping routes for each of your suppliers and clients
Diversification helps to ensure that a single conflict does not cripple the entire business.
5. Use Secure Payment Structures
Financial risk can be mitigated through structured payment methods such as: Letters of credit, export credit insurance, and advance payments or partial prepayment. These mechanisms protect exporters if a buyer becomes unable—or unwilling—to pay due to geopolitical events.
6. Monitor Sanctions and Compliance Rules
Importers and exporters must track sanctions imposed by governments and international organizations, such as the United Nations and the Office of Foreign Assets Control in the United States.
Regular compliance checks help ensure that exporters do not inadvertently trade with restricted entities or regions.
7. Work with Experienced Trade Advisors
Importers and exporters benefit from guidance provided by trade finance specialists, insurers, and risk consultants who understand geopolitical risk environments.
Questions to consider:
1. How does your insurance carrier grade out on its reputation to pay claims quickly and responsively?
2. Does your insurance broker have claims representatives experienced in dealing with international claims?
3. How does your risk management advisor proactively bring emerging risk concerns to your attention throughout the year?
Advisors can help assess exposure, structure insurance policies, and identify early warning signs of instability.
Preparing for a More Uncertain Trade Environment
Geopolitical instability is becoming a defining feature of modern global trade. Conflicts, sanctions, and political tensions can escalate quickly, turning once-stable import and export markets into high-risk environments.
For importer & exporters, resilience depends on a proactive approach, with experts to help. Companies that identify the opportunities crises present, execute risk transfer tactics through contracts and insurance, diversify supply chains, use secure payment structures, and strengthen compliance systems are far better positioned to withstand disruptions.
While importers and exporters cannot control global conflicts, they can control how prepared they are to navigate them! And that preparation can make all the difference in how you protect your people, your profits, your assets, and your reputation.
About the author:
Joe Anderson began his insurance career with Marsh of Boise in 2001 and has enjoyed his 25-year career in risk management and insurance. As founder of Fortify Risk & Safety, his desire is to bring his expertise and strategic skills to companies who want to be elite in Risk Management & Safety Culture.
Over the years, he has gravitated to complex and challenging risks, exposures that were hard to insure or manage. When other professionals settled for higher-priced options or less coverage, Joe would not settle there. He pushed forward to improve the core risk function of his clients, build profitable partnerships with insurance companies, and invest in internal and external risk management personnel.
His company, Fortify Risk and Safety, is an independent, fee-for-service, fractional risk and safety firm. With an outsourced-team-approach, his industry veterans partner with clients to reduce risk in business and make businesses more resilient, agile, & profitable.
Written By: Joe Anderson, CPCU, ARM AFSB, CBRA
Principal & Fractional Chief Risk Officer
At Fortify Risk Management, our risk management veterans have on average 30+ years of corporate experience in managing risk, with companies like Carnival Cruise Line, Boise Cascade Company, Fluor Corporation, Sunkist Growers, and Idaho Power. We bring together risk executives with different backgrounds in a team to work with you to better optimize your risk management approach as you grow, increase profits, and create a great place to work for your employees.
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