Companies typically take a predictable operational approach to managing their supply chains and the risks of sanctions. It’s an approach that can make sense, but only in environments where sanctions are predictable and enforcement is lax.

Those environments are increasingly rare today, and require an entirely different approach. 

When the sanctions environment shifts, banks get cautious, insurers step back and logistics partners start asking tough and unexpected questions. Even when everything looks good on paper, the new reality creates shifts that make these deals no longer attractive or feasible. 

CEOs and their supply chain leaders need to react in ways that allow them to manage the gap between what appears to be compliant and what will actually work in a new environment. Managing that gap is where executive leadership adds its greatest value today.

Historically, sanctions have been the purview of legal and compliance pros. More recently, however, they’ve become a challenge for operations, finance and, ultimately, management. 

The way that governments address sanctions no longer relies on fixed rules. Today’s sanctions are more like living systems.

Banks are de-risking — exiting corridors, correspondent relationships and customer segments — long before regulations require them to do so. Ownership structures can grow increasingly complex. Shipping routes can shift without warning. Markets often respond long before formal guidance can be issued and addressed.  

Checklists that might previously have worked are no longer sufficient to manage risk and avoid impacts. Their cadence and scope lag real-world developments. By the time formal screening procedures catch up with changed conditions, the conditions have already moved. 

Corporate and supply chain leaders today must be adept at thriving in uncertain and turbulent business and regulatory environments. Effective leaders are the ones that start seeking to understand and respond to ambiguity quicker than anyone else. This capacity has a name in organizational theory: sense-making. 

Sense-making is the process by which leaders interpret incomplete or contradictory information to construct a working understanding of what’s actually happening, and use that understanding to guide action before events force their hand.

Questions that must be addressed in today’s sanctions environment include:

• Is this supplier delayed, or permanently unavailable? 
• Is this bank cautious just for now, or exiting for good? 
• Are we seeing a temporary disruption or a structural realignment?

Supply chains are human systems that rely on trust, confidence, incentive alignment and perception. Absent these critical elements, performance will decline — often before the signals become visible in conventional reporting.  

Sanctions pressures can change behaviors in ways that compound problems, escalating impact before adjustments can be made. Suppliers become guarded, buyers over-order, finance teams slow approval processes, and regional managers turn to improvised workarounds that bypass internal approval processes.  

Even when formal reporting thresholds are in place and triggered, unexpected disruptive distortions can spread and create damage quietly and quickly.  

Smart leaders take a different approach that leads to early awareness and the opportunity to adjust. They’re alert and quickly respond to signals from banks, insurers, logistics partners, vendors and regulators.   

Today’s sourcing questions are harder: Where can we source reliably, lawfully, strategically and durably over the next five years, regardless of what the geopolitical environment does?

In the environment we're operating in now, interpretation has become a genuine competitive advantage. 

Gabriel Sidere previously served as office managing partner of CMS Cameron McKenna Nabarro Olswang in Bucharest, Romania.