Supply Chain Risk & Resilience

1. Understanding the risks within your supply chain

It is good practice for a business to periodically review the key risks in their business, both established supply chain risks and emerging challenges. The following is a non-exhaustive list of some of the most significant which can have an impact across many sectors:

• Modern slavery, forced labour and human rights issues.
• Bribery, corruption and financial crimes, particularly proceeds of crime.
• Environmental and deforestation laws and compliance.
• Cyber security, data protection and AI challenges which are becoming increasingly significant in the data driven world we live in.
• Intellectual property risks, including intellectual property theft in supply chains.
• Advertising claims and corporate statements – many companies have found themselves in difficult situations from corporate statements they have made regarding forced labour in their supply chains.
• Product liability issues.
• Contractual, commercial and procurement controls.
• Reputational issues.

2. Supply chain regulation: key standards and legal requirements

International Standards 

At an international level, businesses are increasingly expected to identify and manage supply chain risks relating to human rights, labour standards and environmental impacts. The UN Guiding Principles on Business and Human Rights and OECD Guidelines for Multinational Enterprises on Responsible Business Conduct provide key frameworks for responsible business conduct and reflect international law.

Although voluntary, the OECD Guidelines set recognised standards for areas such as human rights, anti-corruption and supply chain management. Non-compliance can result in complaints, reputational damage and increased stakeholder scrutiny for multinational companies.

Domestic Standards

In the UK, the Modern Slavery Act 2015 sets out a framework for preventing modern slavery and forced labour. Large UK businesses are legally required to publish an annual modern slavery statement outlining their actions taken to address slavery and human trafficking risks within their operations and supply chains, with consequent obligations being followed down their supply chains. Furthermore, the UK government is considering reforms to strengthen reporting obligations and introduce tougher penalties for non-compliance of these laws.

Businesses should also monitor the EU’s growing focus on forced labour in supply chains with the Forced Labour Regulation due to come into force from December 2027. This new regulation will prevent companies putting products made with forced labour (including child labour) on the EU market and exporting them from the EU. This will also apply to UK businesses selling products into the EU market.

As supply chains become increasingly complex, businesses must take active steps to manage bribery and corruption risks. The UK Bribery Act 2010 provides that organisations may be liable for failing to prevent bribery unless they have adequate procedures in place to mitigate that risk. The Economic Crime and Corporate Transparency Act 2023 has heightened fraud risks for large businesses. Since September 2025, large organisations may be liable for certain fraud offences committed by employees or associated persons for the company’s benefit, unless they have reasonable prevention procedures in place.

The principal provisions of the Proceeds of Crime Act 2002 to all UK businesses with additional duties applicable to the regulated sector. Businesses need to be wary of the risks associated with sourcing products or materials which are linked – somewhere in the supply chain – to criminal conduct, including offences committed overseas.

EU legislation due to come into effect from July 2029 will require in-scope businesses to identify and address environmental and human rights risks throughout their operations and supply chains. It will be mandatory for in-scope businesses to take actions to prevent or mitigate any such risks identified during due diligence into their policies and processes.

Businesses trading in the EU should be aware of regulations relating to deforestation-free products and sustainability disclosures, including digital product passports for certain goods. In June 2026, the UK made an announcement on illegal deforestation, declaring proposals to introduce mandatory supply chain due diligence requirements targeting illegal deforestation concerning specified high-risk agricultural commodities (to include cocoa, palm oil, rubber and soya).

Governments and regulators are placing greater emphasis on supply chain transparency, responsible sourcing and corporate accountability. Robust due diligence and risk management processes are therefore becoming essential for businesses operating in domestic and international markets.

3. Supply chains under the spotlight: growing government focus

 Supply chain risk is attracting increased attention from the UK Government, with potential reforms including mandatory human rights and environmental due diligence requirements, enhanced import controls, and measures targeting forced labour within supply chains to align the UK with the current EU regime. The government has indicated that the changes will introduce objective and evidence-based processes to develop the UK’s existing framework for responsible business conduct.

At the same time, government research into global supply chains has highlighted growing vulnerabilities arising from climate change, geopolitical tensions and concentrated supplier networks. These findings reinforce the need for businesses to strengthen due diligence, improve supply chain visibility and build greater resilience into their operations.

For UK businesses, keeping up with these developments will be essential to managing risk, meeting regulatory expectations and maintaining resilient supply chains.

4. Practical steps to strengthen supply chain resilience

Effective supply chain risk management requires a proactive and structured approach. Given the growing legal, operational and reputational risks facing UK businesses, supply chain oversight should be treated as a strategic, board-level priority.

Some practical steps UK businesses can take to strengthen their supply chain resilience include:

• Establishing a robust supplier governance framework, with visibility across the supply chain beyond first-tier suppliers and a clear understanding of critical dependencies.
• Adopting a risk-based approach, categorising suppliers according to their risk profile and applying proportionate levels of oversight and control.
• Carrying out thorough due diligence and ongoing monitoring, ensuring supplier assessments are regularly reviewed and updated throughout the relationship.
• Implementing strong contractual and technological safeguards, particularly in areas such as cybersecurity, where vulnerabilities often emerge through third-party suppliers.
• Developing incident response and escalation procedures, so supply chain disruptions can be identified, managed and resolved effectively by the right departments in your business.
• Maintaining exit and business continuity plans, including arrangements for data return or deletion, intellectual property protection, and post-termination risk reviews.
• Conducting regular reviews of supply chain risks, with annual reassessments of supplier classifications and emerging risk exposures.

By embedding these practices into their governance and risk management processes, businesses can improve supply chain resilience and better protect themselves against regulatory, commercial and reputational threats.

If you have any questions regarding the matters covered in this article, please contact Roanna Landor in our Commercial, IP & Technology team on roanna.landor@fsp-law.com.