South Africa’s manufacturing sector is operating in an increasingly fragmented and unpredictable global environment. Escalating geopolitical tensions, shifting trade alliances, sanctions regimes and regional instability are no longer background risks – they are actively reshaping supply chains, input costs and market access.

Against this backdrop, the latest insights from Aon’s Global Risk Management Survey highlight a critical reality: for industrial and manufacturing organisations, risk is no longer episodic – it is systemic, interconnected and persistent.

“In the current environment, South African manufacturers cannot rely on traditional risk mitigation alone. They need to actively convert volatility into a source of strategic resilience,” says Julie Smith, Corporate Industry Leader at Aon South Africa.

“While economic slowdown remains the top-ranked risk globally, it is increasingly driven and amplified by geopolitical disruption. Trade tensions, protectionist policies and currency volatility are feeding directly into the cost structures and operational stability of manufacturers,” adds Smith.

Aon’s Global Risk Management Survey identifies a cluster of interlinked risks shaping the sector:

• Economic slowdown or slow recovery
• Commodity price volatility and material scarcity
• Supply chain and distribution failure
• Business interruption
• Cyber threats
• Geopolitical volatility
• Regulatory change and exchange rate fluctuation.

“South Africa’s manufacturing output has already shown signs of contraction, with key subsectors – including metals, automotive and food production – under sustained pressure. What makes the current environment particularly challenging is how these risks reinforce one another. A geopolitical shock, such as trade restrictions or conflict in a key sourcing region, can simultaneously disrupt supply chains, inflate input costs, trigger currency volatility and increase regulatory complexity. This interconnectedness is redefining how resilience must be built,” she adds.

Supply Chains in a Geopolitical Era

Global supply chains – once optimised for cost and efficiency – are now being stress-tested by geopolitical realities. For South African manufacturers, high reliance on imported raw materials, components and technology exposes operations to:

• Trade route disruptions
• Sanctions and export controls
• Political instability in supplier regions
• Climate-related shocks affecting logistics corridors.

Geopolitical instability is also feeding directly into economic pressure. Manufacturing activity in South Africa slipped by 2.8% year-on-year in February 2026. In a market where the manufacturing sector contributes 12% – 13% to South Africa’s GDP and accounts for 9.4% of its total working population, that creates a much broader economic risk, not just a sectoral one.

The decision between localisation or reshoring is also not a simple fix. “Rebuilding industrial capacity requires time, capital, regulatory alignment and scarce technical skills – all of which are heavily constrained locally. As a result, manufacturers are being forced into a more nuanced balancing act of maintaining global competitiveness while reducing geopolitical exposure,” Smith explains.

Cyber Risk: The Hidden Multiplier

As manufacturers digitise to improve efficiency and visibility, they are simultaneously increasing their exposure to cyber threats.

“South African manufacturers who are modernising legacy systems, are often faced with a dual challenge of adopting new technologies while managing expanded risk exposure,” says Smith.

Geopolitical tensions often spill into the cyber domain, with critical infrastructure and industrial systems becoming targets. In highly automated environments, a cyber incident is no longer just an IT issue – it can halt production, disrupt supply chains and trigger regulatory consequences.

A Way Forward: From Risk Management to Strategic Resilience

The challenge is not only to withstand these pressures, but to make better decisions in spite of them. Organisations that outperform are those that treat risk as a strategic capability rather than a compliance function.

For South Africa’s manufacturing sector, three priorities stand out:

1. Build Geopolitical Awareness into Decision-Making – Scenario planning must extend beyond financial forecasts to include geopolitical developments. Understanding how global events could impact sourcing, markets and regulation enables more informed strategic choices.
2. Redesign Supply Chains for Flexibility, Not Just Efficiency – Resilience now requires diversification across suppliers, regions and logistics routes. Nearshoring, multi-sourcing and strategic partnerships can reduce dependency on high-risk corridors while preserving competitiveness.
3. Use Risk Financing as a Strategic Tool – Solutions such as captives and alternative risk transfer mechanisms allow organisations to manage volatility more proactively. These tools provide not only protection, but also greater control over capital and risk exposure.

Geopolitical volatility is unlikely to ease in the near term. If anything, fragmentation in the global economy is expected to deepen. For South African manufacturers, this presents a stark choice: react to disruption as it occurs or proactively build resilience into the core of the business.

“Those that succeed will be the organisations that connect risk insight to strategy, using data, foresight and innovative risk solutions to navigate uncertainty and leverage resilience as a competitive advantage,” Smith concludes.