Global trade is only global thanks to key commercial arteries established over the duration of human history.
Think the Panama Canal, the Suez Canal, the Strait of Gibraltar and many more. On that list is the Strait of Hormuz in Iran, through which around 20% of global oil and gas flows. The Strait of Hormuz, which provides the only sea passage from the Persian Gulf to the open ocean, is one of the world’s most strategically important choke points.
Over the weekend, the Iranian parliament reportedly approved a measure to close the passage in response to the U.S. attack on three Iranian nuclear enrichment facilities.
For CFOs and finance leaders, this development is not just a geopolitical flashpoint but a potentially critical wake-up call. The closure of a single maritime chokepoint can upend entire industries, disrupt revenue forecasts and force companies to reevaluate sourcing and logistics strategies.
Already, the threat of the Strait of Hormuz’s closure and the security risks around the area have reportedly forced major shippers to reroute their ships, a move that could inflate transportation costs and impair budget forecasts for the second half of the fiscal year.
In this new trade reality, CFOs must move beyond traditional cost-control thinking to embrace a proactive, agile and strategic role in establishing both supply chain and operational resilience. After all, the only certainty in 2025 is the prevalence of more, and more costly, uncertainty.
Read more: Tariff Turmoil Puts Supplier Risk, Supply Chain Management Under Microscope
Uncertainty Takes a Financial Toll on Back-Office Operations
In today’s volatile world, supply chain management is becoming increasingly intertwined with financial management. That means the CFO’s role has never been more complex or consequential.
Many companies still operate with siloed systems that separate procurement, logistics and finance. The potential closure of the Strait of Hormuz highlights a need to integrate these datasets in order to manage disruptions. Advanced enterprise resource planning (ERP) systems, artificial intelligence (AI)-driven analytics platforms and real-time dashboards can help CFOs track supplier risk, transportation bottlenecks and fluctuating input costs in real time.
PYMNTS Intelligence data has found that tariffs and other supply chain disruptions have forced most middle-market U.S. goods and retail companies into reactive mode. Their responses range from adjusting global supply chains and altering product design, pricing and market strategies to delaying or cancelling product development plans.
At the same time, liquidity can help serve as the ultimate shock absorber. By maintaining strong cash reserves or flexible credit lines, companies can weather short-term cost spikes or delays without compromising operations. CFOs can take time to reassess their working capital strategies, accelerate receivables collection and even renegotiate payment terms where possible.
“Working capital and cash flow optimization is the driving force behind the surging demand for supply chain finance,” Seamus Smith, executive group president at FIS, told PYMNTS.
As for the 73% of businesses that still use paper checks, they might just find their operations are no longer agile enough to keep pace with the onslaught of supply chain interruptions.
Research by PYMNTS Intelligence has found that nearly 20% of small- to medium-sized businesses (SMBs) are pessimistic about their odds of surviving the next five years.
See also: How CFOs Can Manage for Today’s Supply Chain Choke Points
Mitigating the Damage From Supply Chain Disruptions
Investments in resilience — from digital supply chain visibility tools to alternative supplier development — may not offer immediate cost savings for CFOs taking the first step in digitizing manual processes, but they can help deliver long-term value through stability, risk mitigation and agility.
The threat of the Strait of Hormuz’s closure is far from the only supply chain disruption business leaders have dealt with. Last year, the collapse of Baltimore’s Francis Scott Key Bridge as a result of a cargo ship collision caused problems up and down the East Coast. The global shipping landscape has also suffered snarls from ongoing attacks from Houthi militants in the Red Sea and an earlier drought in Panama that slowed traffic through the Panama Canal.
“Whether the run is three years, five years, 10 years, there will be another crisis. It’s just a matter of figuring out what type of crisis and how that’s going to impact your business,” Angela Floyd, CFO at DPR Construction, told PYMNTS, emphasizing that leveraging concepts like pre-mortem and scenario planning when “the times are good” can offer organizations a valuable way to prepare for the unknown and better protect their balance sheet.
PYMNTS Intelligence has found that firms whose biggest source of uncertainty was supply chain challenges lost an average of $11 million, or 3.8% of revenue, in the past 12 months.
