Supply Chain Risks Surge Amid U.S.-Iran Conflict and Global Economic Concerns
The Lehigh Business Supply Chain Risk Management Index (LRMI) for Q3 2026 highlights a sharp increase in supply chain risks, driven primarily by geopolitical tensions and economic uncertainties. The ongoing U.S.-Iran war and the blockade of the Strait of Hormuz have significantly influenced this quarter’s findings, notably impacting fuel and diesel prices.
Transportation Disruption Risk, previously a mid-tier concern, has surged by nearly 16 points, making it the most pressing issue for supply chain professionals this quarter. “This surge vaulted it from the middle of the pack to the single largest supply chain concern,” remarked Zach G. Zacharia, Ph.D., an associate professor and director of the Center for Supply Chain Research at Lehigh. Economic risks are also prominent, reflecting worries about rising energy costs, inflation, and labor shortages potentially leading to a recession.
Amid these challenges, Government Intervention Risk has increased, spurred by a Supreme Court decision affecting tariff policies. Cybersecurity remains a significant concern, although it has slightly decreased in priority. Zacharia noted, “Respondents cited AI-enabled phishing, autonomous exploitation of software vulnerabilities, and third-party breaches.”
The LRMI analysis reveals that six of the ten risk categories saw an increase, pushing the overall risk index up by nearly four points for the quarter. This emphasizes the heightened risk environment for Q3 2026.
Established in 2020 by the Center for Supply Chain Research at Lehigh and the Council of Supply Chain Management Professionals, the LRMI ranks risks across ten broad categories. This tool aids executives and supply chain managers in anticipating significant upcoming risks. The categories include cybersecurity, economic, environmental, government intervention, operational, quality, supplier, technological, and transportation disruption risks.
A noteworthy feature of the LRMI is its ability to directly compare these risk categories against each other. For Q3 2026, the leading risks concern economic factors, transportation, government intervention, and supplier challenges.
The latest LRMI report presents insights from supply chain managers, offering a deeper understanding of each risk category beyond mere statistics. Highlights from the report include:
- Shipping demand surged by over 20% in the first quarter, underscoring a critical freight capacity shortage.
- Rising costs and workforce challenges are prevalent, with concerns over pending jet fuel shortages affecting international shipping.
- Economic uncertainty, partially due to fears of an AI bubble, has prompted enterprises to seek cost-saving measures, benefiting AI vendors.
- Tariff policies remain unpredictable as the administration seeks alternatives following Supreme Court actions.
- AI’s role in cybersecurity, particularly in Advanced Persistent Threats, is a growing concern as adversaries become increasingly sophisticated.
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The LRMI provides quarterly updates in March, June, September, and December. For the latest report and information on participating in the next quarter’s survey, visit business.lehigh.edu/LRMI.
About the Center for Supply Chain Research at Lehigh
CSCRL bridges theory and practice, fostering a collaborative exchange on supply chain management issues. Leveraging Lehigh’s resources, the Center connects research and best practices to advance education and knowledge in the field. Learn more.
About the Council of Supply Chain Management Professionals
CSCMP connects, educates, and develops supply chain professionals globally. At any career stage, CSCMP offers resources and networks to achieve professional goals. Learn more.
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