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In today’s volatile economic environment, tariffs create headwinds for both businesses and households, while the global trade war generates uncertainty. Business owners need ways to ensure security and long-term resilience. Robust risk management is now a business priority. Proactive strategies for anticipating, adapting to, and recovering from potential disruptions across these multiple fronts will help you keep your business moving forward through economic turbulence.
Economic downturns significantly amplify risks for individuals, businesses, and financial institutions alike. This article is our second in a series, “Beyond the Curve,” built for commercial fleet managers navigating today’s economic uncertainty. From long-term strategy to daily cost controls, we explore how local and regional fleets are managing risk, reducing expenses, and positioning themselves to weather volatility and emerge stronger.
Today, businesses face heightened threats, including reduced consumer spending, supply chain vulnerabilities, and increased financial market volatility. These threats could decrease revenue, slow down production, and limit access to capital. To put it simply, businesses are more likely to fail (or go bankrupt) when the economy is bad.
American businesses will still face significant economic impacts despite a recent U.S.-China trade agreement that lowered tariffs from 120% to 30%. The U.S.’s reliance on China for crucial machinery, natural resources, and industrial components makes it vulnerable. In 2024, 28.2% of U.S. electrical machinery, equipment, and parts imports came from China, according to the Commerce Department. Alternative sources for precision tools, automated production lines, and specialized heavy machinery parts are difficult to find and more expensive. Consequently, tariffs on these essential goods will substantially affect the American economy.
During times of economic uncertainty, individuals may experience increased job insecurity, with potential layoffs and hiring freezes looming. Diminished income and savings can cause financial hardship and impact the ability to meet even basic needs. Investment portfolios may suffer losses, and asset values, such as real estate, can also decline. These kinds of threats cause an additional strain on personal finances. For a business, the impact of a tough economic climate might lead to distress and distraction for employees.
Financial institutions (FIs) encounter greater credit risk when the economy is in a tailspin, as borrowers struggle with making loan repayments. FI customers are increasingly under financial distress, and that strain is passed on to the institutions in which they bank in the form of late payments or defaults. Prices fluctuate at a higher frequency, which makes investing riskier (there are more factors potentially contributing to losing money on an investment). The potential for systemic risk, where the failure of one institution triggers a wider crisis, is also of greater concern during global economic instability.
Economic uncertainty can result in broader changes that might not be apparent immediately but that reveal themselves over time. For example, during economic strife, there can be decreased investment, lower productivity growth, and increased social unrest, which all have the potential to impact a business’s operations. At the start of 2025, for three months in a row, consumer confidence fell, and it’s now down more than 30% since November. Consumer spending is another indicator of the public’s market confidence, and according to a recent survey conducted by the University of Michigan, in January 2025, consumer spending fell for the first time in two years.
State and local governments are also affected by an economic downturn. When government funding decreases as GDP decreases, local resources decrease. This diminishment of resources might result in a struggle to manage fiscal deficits and affect local governments’ ability to provide adequate social safety nets for their constituencies.
Geopolitical risks can also be exacerbated during economic downturns. Trade disputes increase tensions between countries and destabilize the relationships between allies and potential adversaries that are critical for retaining peace.
One way to mitigate the impacts of economic turbulence is to plan ahead. You can build a risk management plan to keep your business as resilient as possible.
When crafting a risk management plan, businesses should be particularly aware of the following risks that can occur during economic uncertainty:
Enterprise risk management (protecting the core of your business from the negative impacts of volatility) plays a vital role in preparing for these potential impacts by evaluating risk exposure, scrutinizing mitigation strategies, and employing scenario analysis for future planning. In the current global trade environment, it’s worthwhile to assess how newly adopted tariffs will impact your business. Organizations should actively assess the impact of tariff measures, the potential for a recession, and the supply chain disruption that is likely to come. Start by emphasizing to your internal stakeholders the need to identify relevant risks and establish key risk indicators to monitor. Preparing those responsible for the business decisions that involve risk to navigate volatility will be key to your success.
Depending on the size of your business, you might consider creating a risk task force. It would be ideal for the people on your task force to come from a range of functional areas within your business. Your plan will outline what your business needs to mitigate risk. Your task force will create the plan and then bring in the talent needed from within your organization to carry out the action items outlined in your plan.
Your resilience plan should encompass the following key elements:
Beyond planning, effective risk management requires ongoing processes, which ideally would be overseen by the team that created your risk management plan. These ongoing processes include:
Within your organization, there are four key areas to focus on when mitigating risk, and each may have its own part in your plan. Here is an outline of a typical business’s key areas where you will want to create a risk management plan:
Key Area | Strategy | Simple How-to |
Financial | Diversify income streams | Explore new markets and product offerings. |
Operational | Invest in employee training | Enhance workforce skills and organizational flexibility. |
Technological | Implement robust cybersecurity measures | Protect critical data and infrastructure from cyber threats. |
Market | Enhance customer engagement | Build strong and lasting relationships with customers. |
WEX provides the support your business needs during both difficult times and times of growth. With over 42 years in the industry, WEX knows how you operate. With that knowledge, WEX builds products and services based on the specific needs of fleet management.
Fraud can particularly impact your bottom line during times of economic uncertainty. Preventing fraud comes down to having the right systems in place in advance of an attack. A fuel card program that gives you visibility, control, and built-in fraud protection is one of the most effective ways to avoid fraud threats to your business.
With WEX, you get:
If you’re actively looking for ways to mitigate this turbulent economy, reduce fraud, and gain visibility into your fuel spend, the right partner can make all the difference. Smart fraud prevention uses data to predict and prevent issues, and keeps your business moving and your spend right where you want it.
During these times of global economic uncertainty, resilience planning and proactive risk management will help your business mitigate the difficulties to come. By diligently identifying potential risks, developing comprehensive mitigation strategies, and implementing robust management processes, organizations can significantly strengthen their ability to withstand economic challenges and emerge from them in a stronger position.
Next in the series: Fleet resilience in 2025: Lessons from those who adapted
Learn more: Read the first article in the series or download our Fuel cost planning checklist to help your business prepare for uncertainty with confidence.
All fleet cards are not the same, and different types of fuel cards suit the needs of different kinds and sizes of businesses. View WEX’s fleet card comparison chart to see which fleet fuel card is right for you.
WEX speaks the language of small business operators. Whether you’re looking to modernize your insight and reporting efforts, save on fuel costs or take advantage of the latest GPS tracking technologies, WEX offers solutions to simplify the business of running a business. To learn more about WEX, a dynamic and nimble global organization, please visit our About WEX page.
Learn more on how to better manage your small business:
Resources:
Time Magazine
University of Michigan
Manufacturing Today
Yahoo Finance
Al Jazeera
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