How Procurement is Navigating Black Swan Events

Procurement has been rocked by a series of events which have fundamentally transformed the way businesses operate. 

From the COVID-19 pandemic to geopolitical tension and climate-related events, procurement teams have found themselves at the epicentre of managing the unthinkable. These ‘black swan’ events – defined as low-probability, high-impact occurrences that catch organisations off guard – have reshaped how businesses approach supply chain resilience.

Here, Alex Saric, Smart Procurement Expert at Ivalua, and Graham Copeland, Head of Services Sales Europe at GEP, share insights on how procurement leaders can not only survive but thrive when facing the unexpected.

Traditional risk models fall short

The shortcomings of conventional risk assessment has become starkly apparent in recent years.

Graham points to glaring examples of how traditional forecasting missed the mark: "Traditional risk models rank risks by likelihood and severity, but history shows they often miss the mark. For instance, WEF's widely-regarded risk report rated infectious disease low just before COVID and interstate conflict was downplayed before Russia's invasion of Ukraine."

This has forced procurement leaders to reconsider their entire approach to risk management. Rather than attempting to forecast the unforecastable, successful organisations are pivoting towards building resilience into their supply chains.

The statistics paint a concerning picture of industry preparedness. A recent GEP survey revealed that nearly half of companies lack any formal supply chain risk assessment practices – a sobering reminder of how many organisations remain vulnerable to disruption.

Recent black swan events have demonstrated the need to abandon the futile pursuit of predicting every possible risk in favour of building adaptive capability.

Graham advocates for this paradigm shift, saying: "Instead of focusing on predicting risks, focus on resilience. Ask: ‘can your supply chain absorb shocks, adapt operations and restore quickly’?"

The technology revolution in risk detection

While predicting true black swan events remains impossible, technology has revolutionised early warning systems for emerging risks.

Alex explains how AI has transformed the landscape: "AI has revolutionised how organisations get early warnings to black swan events. While true black swan events are inherently unpredictable, AI and advanced analytics help detect emerging risks that might otherwise go unnoticed."

Gone are the days when procurement teams relied solely on Excel spreadsheets – tools that Alex describes as “too slow and limited in today's environment of geopolitical tensions, tariff wars and climate-driven disruption”.

Modern AI-powered platforms can process vast amounts of information simultaneously, scanning everything from supplier performance metrics to global news feeds. This comprehensive monitoring enables real-time risk flagging and supports predictive analytics that help procurement teams anticipate potential supply shocks and evaluate alternatives with unprecedented speed.

Generative AI: The game-changer for real-time response

The emergence of generative and agentic AI has particularly transformed real-time supply chain monitoring and incident response capabilities. 

Research from Ivalua demonstrates the tangible benefits procurement teams are experiencing: improved data analysis for decision-making (85%), task automation (83%) and demand forecasting (79%).

Alex highlights the practical implications: "Gen AI and agentic AI enable procurement teams to perform instant risk assessments and develop mitigation plans during supply chain disruptions, significantly reducing response time. 

“By automating manual processes, these tools also free up teams to focus on higher-value activities such as risk analysis, relationship-building and developing strategies that enhance supply chain resilience and agility."

Making risk analytics part of daily operations

The most effective organisations embed risk analytics directly into their procurement workflows rather than treating it as a separate function.

Alex explains the integration approach: "Businesses can integrate risk analytics into their procurement management systems by embedding risk dashboards, scorecards and indicators directly within their Source-to-Pay workflows."

This unified method combines internal assessments with external data sources to create comprehensive supplier risk profiles across financial, regulatory, geographic and ESG dimensions.

Real-time monitoring, automated alerts and validation workflows enable teams to detect and respond to emerging risks rapidly, while seamless integration with third-party providers allows procurement teams to visualise and act on risk signals effectively.

Data: The foundation of effective risk management

The most valuable insights emerge from combining internal operational data such as supplier performance metrics, risk scores, inventory levels and logistics data with external intelligence, including geopolitical news, macroeconomic indicators and ESG or financial risk ratings. 

When analysed using generative AI, predictive analytics and anomaly detection algorithms, these diverse datasets help organisations identify early disruption signals and highlight patterns that enable proactive responses.

However, data integrity remains paramount.

Alex emphasises that "a solid foundation provides more accessible, accurate information and enables workflows to automatically action based on the information”.

Critical considerations include ensuring unified data models with all information mapped to single supplier records and integrated master data management capabilities. 

Measuring success: The right KPIs for resilience

Graham advocates for a results-focused measurement approach: "The ultimate test of procurement risk management is when risks become real, leading to sales losses, downtime, regulatory breaches or negative headlines, which are all measurable. The critical KPI is zero occurrences."

He believes there are five essential KPIs every CPO should track:

• Zero critical incidents (sales loss, downtime, compliance breaches)
• Time to recover when disruption strikes
• Active high-risk items trending downward
• Supplier resilience metrics (defaults, single-source dependencies, geographic concentrations)
• Continuity and ESG compliance (updated plans, stress tests, code of conduct adherence)

Sustained resilience in uncertain times

As procurement teams navigate an environment characterised by extraordinary levels of uncertainty, such as double or even triple-digit tariffs being levelled on countries and sectors with little notice, the imperative for building resilience has never been clearer.

The most successful organisations understand that resilience requires sustained collaboration across the business and continuous attention even after immediate crises fade. 

Graham adds: "Risk will never disappear, but organisations that invest in these capabilities suffer less damage and bounce back faster."

The path forward involves moving beyond reactive crisis management to proactive resilience building, leveraging advanced technologies for early warning and rapid response and maintaining the organisational discipline to invest in preparedness during calm periods. 

For procurement leaders, the question is not whether the next black swan event will occur, but whether their organisations will be ready to navigate it successfully.

In an article published on KetteQ’s website,  HP’s Chief Supply Chain and Chief Digital Officer Ernest Nicolas discussed how the pandemic exposed the fragility of global supply chains built for efficiency rather than resilience. Lean, just-in-time models collapsed under supplier shutdowns, port congestion and unpredictable demand, forcing leaders to make rapid decisions with limited data.

"One thing is clear: future supply chain disruptions won’t look like the past," wrote Ernest. 

“Whether the next crisis is driven by geopolitics, cybersecurity threats, climate change or something we haven’t yet imagined, the companies that thrive will be those that plan for every possibility. That means moving away from rigid, outdated planning models and embracing adaptive supply chain planning.”

The next black swan is coming. The question is, will your supply chain be ready?