Financial Risk Archives

Why Supply Chain Visibility is a CFO Imperative in 2025

Posted on August 20, 2025 by interos.ai

72% of surveyed CFOs anticipated the North American economy would improve this year, according to Deloitte’s fourth quarter North American CFO Signals Survey. This positive outlook translated into an increased appetite for risk taking, with 67% of CFOs believing it was a good time to take greater strategic risks. However, as geopolitical tensions continue to grow, that optimism is slowly waning with 57% of CFOs citing economic policy as a top factor impacting short-term strategy changes, according to a recent survey by PwC.

For CFOs, navigating a volatile economic landscape means balancing an optimistic growth agenda, requiring deep visibility in global supply chains, where hidden risks can quietly erode margins, stall operations and damage reputation.

The Driving Force Behind Business Stability and Growth

For decades, the supply chain has been viewed as a cost center or a purely operational concern. However, in recent years, we’ve seen that the supply chain is the backbone of stability and growth potential. Every tariff imposed, every shipment delayed, and every supplier disruption directly impacts the bottom line. This is especially true in a geopolitically charged environment, which Deloitte found was a top concern for nearly half (46%) of CFOs.

And yet, despite this uncertainty, optimism persists: 59% of CFOs said they are significantly or somewhat more confident in their organizations’ financial prospects for the year ahead, with many projecting 10.8% revenue growth and 7.6% earnings growth in 2025. These targets rest on an understanding of where bottlenecks, concentration risks and capacity constraints could surface. Without a line of sight into the full supply chain, financial forecasts risk becoming detached from operational reality.

CFOs continue to seek opportunities for increased capital and market expansion, but without deep insights into their supply chains, these opportunities often carry immense hidden risk.

As of July 2025, over 250,000 companies in the US show a high or moderate financial risk rating, according to interos.ai data. Exposing financial threats lurking in extended supply chains is vital to manage enterprise risk.

Growth Without Blindspots: Why Supply Chain Insight is a CFO Mandate

Enterprise risk management (ERM) continues to rise on the CFO agenda, driven not just by economic and geopolitical risks (cited by 56% and 46% of CFOs respectively), but also by cyber threats, regulatory shifts and talent shortages. Risk is no longer siloed, it’s felt across functions.

A modern ERM strategy starts with visibility. This means seeing beyond the balance sheet and into the operational core of the business, its supply chains. By embedding AI-powered analytics and insights, CFOs can get a holistic view into their vulnerabilities, assess potential financial impacts and make more informed decisions.

According to interos.ai data, the number of companies showcasing moderate to high financial risk postures has grown by 4x over 2 years in the US.

Empowering CFOs with Real-Time Foresight

For today’s finance leaders, it’s no longer an option to simply wait and react. They are increasingly recognizing that real-time comprehensive data is their most powerful tool for navigating today’s constantly shifting economic landscape. Yet, 51% of CFOs cite technology deployment as a top internal concern, on par with agility and resilience. If CFOs plan to truly transform their organization, they must invest in advanced solutions that provide instant insights into the global supply chain.

Modern platforms like interos.ai offer real-time, multi-tier visibility into supply chains. With this intelligence, CFOs can:

Anticipate and model the financial impact of tariff changes, supplier disruptions or geopolitical shocks
Adjust sourcing strategies and inventory decisions as soon as issues arise
Monitor supplier health and ESG factors to align with regulatory standards
Avoid hidden concentration risks that could destabilize production (and ultimately revenue)

A single supplier’s financial distress or a new trade restriction can create cascading delays and challenges. A CFO equipped with dynamic supply chain data in a centralized view can quickly assess exposure, reroute plans and maintain business continuity.

The Path to Proactive Financial Leadership

For CFOs, supply chain insights are no longer just a nice to have. It’s a foundational capability for finance leaders. As Deloitte research shows, enterprise-wide risk mitigation, digital transformation, and ambitious growth projections are top of mind for CFOs across industries. However, achieving these objectives in today’s unpredictable global environment requires strategic, proactive management across every tier of the supply chain.

By leveraging AI-powered risk intelligence, CFOs who partner with interos.ai gain real-time, multi-tier supply chain visibility to easily identify and quantify risks before they become boardroom problems.

In 2025 and beyond, resilient growth will belong to organizations that see risk early and act even faster.

Stop guessing and start knowing with interos.ai. Learn how by booking a demo today.

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Recession, Risk and Retaliation: Mapping Global Economic Fault Lines

Posted on July 25, 2025July 25, 2025 by Abby Kaemmerer

Author: Teddy DeWitt, PhD, Lead Computational Social Scientist

Recession Fears Linger Amidst Consumer Pessimism and Tariff Uncertainty

The U.S. economy may be showing signs of fatigue. The Conference Board Leading Economic Index fell for the sixth straight month in May, suggesting a slowdown in American economic activity. In the wake of ongoing tariff pressures, the University of Michigan’s Index of Consumer Sentiment reached its second lowest level of all time at 52.2 in April of this year. While the measure rebounded in June, it i s still down 11% year over year. Given these factors, plus the rise in geopolitical tensions with the Israeli and American attacks on targets in Iran, and Iran’s retaliatory threat to block the Strait of Hormuz, a major shipping lane for crude oil, recession fears are on the minds of many.

At interos.ai, understanding and measuring recession risk is a key part of our process for evaluating financial risk at the country level. Specifically, we developed our Recession Warning Indicator to provide a forward-leaning barometer of future economic instability within a country.

We looked at financial risk from the “Liberation Day” announcement in April to assess financial anomalies and lurking risks – covering a deeper view of the financial fallout in our Tariffs Report. Our analysis, based on our Recession Warning Indicator and follow-on research, suggests that while the world economy is currently avoiding recession, many countries are still at high levels of risk. This indicator is a key risk factor that interos.ai tracks as we understand that recession risk in one country can ripple through trade partners. This ripple effect can lead to weakened export markets, decreased investor sentiment and overall destabilized global supply chains. A combination of ongoing geopolitical events and tariff headwinds could shift some of those countries into recession this year.

Assessing Recession Risk: interos.ai Highlights Three Global Trends

interos.ai’s Recession Warning Indicator helps identify countries that are at risk of recession in the near future. This indicator assesses trends across major economic signals including GDP growth rates, unemployment rates, inflation rates and consumer spending metrics. Our computational methods combine these trends into a score with the same risk categories as set out in our broader i-Score™ methodology. This metric allows us to assess:

As the concern for a potential recession increases for the American economy, is the U.S. an isolated case or part of a more widespread pattern?
Compared to historical trends, is the recession risk increasing or decreasing?

The interos.ai Recession Warning Indicator highlights three global trends:

1. Europe and the Eurozone broadly are at the greatest risk of recession.

Globally, there are 54 countries with a Recession Warning indicator falling within the high-risk category. Of these, 38 countries are in Europe. This finding is consistent with the overall projection of modest growth for the region, with the European Commission projecting GDP growth of 1.1%, and the European Central Bank seeing slightly more tepid growth at 0.9% actions taken by the European Central Bank who cut short term interest rates in June for the 8th time this year to 2%. A recession in this massive trading area would greatly impact the global economy.

2. North America may not be far behind Europe: high recession risk looms.

The U.S., Canada and Mexico all have scores within the high-risk category. However, these scores are overall improvements from October of last year when the scores for these countries were nearly 38% lower and subsequently deeper into the high-risk zone. This improvement represents outperformance compared to the global median percentage increase coming in at 27% over the same period. Nevertheless, the uncertainty around tariffs is the primary concern for North America broadly and the United States specifically. The ultimate size of tariffs has the potential to dramatically impact GDP in the second half of the year. According to some economic forecasters, the simple lack of clarity around what the tariff regime will look like, could significantly hinder economic growth and stability. U.S.-based companies will face impacts not just at home, but across their global supply chains, compounding existing vulnerabilities and triggering widespread disruptions.

3. The picture for Asia is a mixture of vulnerability and strength.

Three of the largest economies in Asia: Japan, Korea, and India, all are within the high risk category of the Recession Warning indicator. However, China, Vietnam, Singapore and Thailand are safely in the moderate risk category trending towards low risk.

Despite China being low risk, the country alone makes up nearly 20% of the world’s global GDP which means a recession would devastate global supply chains. Vietnam’s economic growth story is particularly interesting as it experienced GDP growth of 7% in 2024, partially grounded in reshoring trends as much as 8% in 2025 until tariff uncertainty creates some economic headwinds. That said, Vietnam’s economic growth story remains strong with GDP growth forecasts of 6.8% for 2025, anticipated from a combination of strength in manufacturing and tourism. Additionally, Trump has struck a preliminary deal with Vietnam that would drop tariffs from 46% to 20%, which makes it a more attractive market for longer term stability. However, even though it is a lower risk market, companies still need to assess potential suppliers on all six risk factors spanning cybersecurity, geopolitical, ESG, extreme weather, restrictions and financial risk.

Anticipate and Adapt: What’s Next For Your Supply Chain?

In the coming months, there are several global factors to watch that will have a large impact on the global economy.

Whither Tariffs? – While the Trump Administration’s willingness to delay on enacting its trade policy has resulted in positive reactions from financial markets, a lack of executed trade deals with our largest trade partners gives ongoing reason for caution. However, the recent additional tariffs on Mexico and the EU as well as 23 other trading partners paint a volatile landscape and set the stage for retaliatory measures. Retaliatory tariffs from China along with its export controls on critical materials like rare earth minerals are an example of the risks created by tariff policies. These factors will continue to percolate through the American economy and beyond, leaving many companies struggling to avoid unexpected financial challenges and supply chain disruptions.
Iranian Blockade of the Strait of Hormuz – By some estimates, 20% of global crude oil shipments flow through this passageway. Crude oil importers such as China and Japan could take an economic hit in the event of a prolonged blockade. In the case of Japan, this could either maintain or add to its potential economic weakness. A blockade of this vital area would cause spikes in energy prices leading to increased transportation and manufacturing costs.
Ongoing Global Conflict – With the Ukraine/Russia conflict persisting, we can expect the resultant humanitarian crisis and supply chain interruptions to continue to weigh on Europe’s economy. Given the possibility of an expanded conflict in the Middle East due to military action by the U.S., Israel, and Iran, as well as the ever-present threat Taiwan faces from China, there is enough geopolitical tension to slow down global supply chains well into 2026 as it disrupts production and blocks trade routes, leading to longer lead times and increased costs.

As the ongoing complexity between economic policy and geopolitical events continues to play out over the coming months, the interos.ai Recession Warning Indicator will surface the areas of weakness and pockets of strength throughout the global economy.

Download our exclusive Tariffs Report for immediate insights into the evolving global supply chain landscape and what actions to take today to get ahead of supply chain shocks.

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Thousands of Companies Exposed to High Financial Risk Following President Trump’s Tariffs

Posted on April 11, 2025April 11, 2025 by interos.ai

Authors: Kate Anderson, PhD, Senior Manager, Network Science and Teddy DeWitt, PhD, Lead Computational Social Scientist

Markets across the globe crashed in response to last week’s tariffs, erasing more than $10 trillion and causing drops not seen since the beginning of COVID. The turmoil continued on Wednesday, with a series of retaliatory tariff announcements.

While the White House did announce a 90-day delay in country-specific tariffs, with a corresponding market rebound, these swings in the market are disruptive and reflect broader concerns around an uncertain economy.

However, the impact is not uniform. Some companies are seeing larger swings than others, indicative of additional financial risk. Thanks to interos.ai’s anomalous returns predictive model, we can leverage market data to identify which companies and industries have a greater likelihood of enhanced financial risk in this era of uncertainty and trade barriers.

A Tumultuous Financial Market: Tariffs and Trade War

Last week’s reciprocal tariffs executive order introduced a 10% tariff on all US imports, with steeper rates for dozens of countries, including some of the US’s biggest trade partners.

While the worldwide 10% tariff went into effect on Saturday, April 5th, this was then paused and for the next 90 days as of April 9th. The tariff rate on China went into effect on April 9th.

The other promised country-specific tariffs are scheduled to start after a 90-day period. These additional tariffs – impacting 86 countries – disproportionately affect some major US trading partners, including China, India, Vietnam, and Taiwan, with projected severe effects on supply chains and global markets.

The 10% world-wide tariff and “reciprocal tariffs” on other countries add to those already levied by President Trump earlier this year, including an additional 10% duty on imports from China, a 25% tariff on imported cars, 25% on steel, between 10-25% on aluminum, and import tariffs on a variety of Canadian and Mexican goods.

The new batch of US import tariffs hits several of the country’s largest trading partners, which interos.ai forecasts will have a dramatic effect on supply chains.

The initial announcements raised the tariffs on Chinese imports by 54%, to a total of over 64%, with updated announcements increasing rates to 125%.

Chinese goods represent 16% of US imports, including critical parts and raw materials such as rare earth metals. Other major US trading partners were threatened with similarly large tariffs.

India’s announced tariff rate rose from 2% in 2024 to 26%. The tariff rate in Taiwan—the source of most of the world’s semiconductors—rose from 1% to 32%. While semiconductors are not currently under tariff restrictions, President Trump has implied that they may lose that exemption. Tariffs on Vietnam—a significant exporter of electronics—are going from 4% to a staggering 46%.

These tariffs have triggered retaliatory measures by other countries:

China quickly responded with a 34% tariff on all imports from the US, increased to 84% and again increased to 125%.

Canada announced a 25% retaliatory tariff.

European Union reacted with tariffs on a wide range of goods commonly imported from the US.

These numbers are changing daily, fueling uncertainty and market instability.

Financial Instability: Identifying At-Risk Industries and Companies

The reaction of the markets to the tariff announcement was immediate and dramatic.

On April 3rd, the day the tariffs were announced, the markets experienced a drop of 4-6% — the largest single-day drop since the pandemic.

This kind of drop in market price suggests that investors are anticipating future financial instability.

While the markets rebounded after the 90-day stay announcement on Thursday, investors are still extremely nervous, and markets are likely to experience further big swings in the coming months.

As part of interos.ai’s comprehensive machine learning model for financial risk, the anomalous returns model captures unexpected shifts from expected market behavior.

Markets often reflect the collective knowledge of investors about the financial future of a company. By including daily market returns in our scoring, interos.ai leverages that collective knowledge to predict financial risk, especially important in identifying which companies or industries may be most affected.

interos.ai uses an algorithm to identify anomalies in return data—companies that experience a larger drop than would be expected given current market conditions and historical price volatility. This indicator was inspired by the Silicon Valley Bank (SVB) banking crisis, when the stock price of SVB experienced an abnormally large decline months before the actual crisis occurred.

Looking at the overall market certainly highlights the pessimism of the market.

However, it disguises an important factor — losses are not uniformly distributed across different parts of the economy.

While some industries experienced large drops in average returns, others saw no drop at all. The table below shows the interos.ai industries that saw the largest drop in market returns last week. Apparel, Manufacturing, and Retail industries saw the biggest hits, followed by Ship Building, Springs, Furniture Manufacturing, Electronic Components, and Freight and Transportation.

The picture is still more complex than that.

interos.ai’s Financial Model Shows Over 1,000 Companies Exposed to Abnormally High Financial Risk from President Trump’s Tariffs

After all, the entire market crashed on April 3rd, and even healthy companies likely took a hit. In addition, some industries are more volatile than others, meaning that what might be a large drop in market price for a metal manufacturer looks very different from what normal looks like in other industries. Our anomalous returns model identifies companies that saw a disproportionate fall in market returns, relative to declines in the rest of the market and relative to historical volatility.

Context is everything.

And makes the difference between getting in front of risk or being controlled by the risky fallouts. While electronics made headlines for seeing a big drop in returns on April 3rd, the data from the anomalous returns model suggests that the drop was not abnormally large. The electronics market is historically volatile such that we expect returns in that industry to drop with the smallest overall market decline.

In contrast, metal manufacturing and fossil fuel extraction are extremely stable industries. Seeing a large drop in the market returns for companies in those industries is a huge red flag, even if they are smaller in absolute terms than the drops in electronics.

interos.ai identified over a thousand companies globally that exhibited an abnormally large response to the market shifts.

These are companies that not only experienced losses, but unexpected losses—losses that are many times larger than would be expected given the overall market decline and are therefore at much greater financial risk.

Some companies experienced extraordinarily large losses, with the highest of these declines upwards of 50%.

Unsurprisingly, many of the penalized companies come from countries heavily impacted by the new tariffs, including Canada, Japan, and China.

Avoiding the Fallout from High Financial Risk

The uncertainty around the US’s position in the global economy continued this week as some announced tariffs went into effect and others were delayed.

The global response to the announcements were swift, with retaliatory tariffs levied against US imports and stock markets falling.

Jamie Dimon, Chaiman and CEO of JPMorgan Chase commented on the risk climate we have entered in his latest letter to shareholders. “The economy is facing considerable turbulence (including geopolitics), with the potential positives of tax reform and deregulation and the potential negatives of tariffs and “trade wars,” ongoing sticky inflation, high fiscal deficits and still rather high asset prices and volatility.”

During such an unprecedented time, supply chain resilience becomes even more critical. To stay afloat in a tumultuous trade war is to stay abreast of the regulatory shifts and to ensure visibility into your supplier dependencies.

If a critical supplier is buried in your supply chain and is exposed to abnormally high financial risk, you need to know. And you need to know so you can act before disaster strikes. Underlying market information can help surface growing financial risks.

interos.ai will continue tracking those companies and industries exhibiting anomalous returns, providing proactive intelligence for our customers as they weather such dramatic micro-economic fluctuations.

Supply chain disruptions cost financial services organizations $164 million per year on average.

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