Australian companies are increasingly exploring onshoring and near-shoring as alternatives to traditional offshore supply chains, aiming to reduce exposure to global disruptions.
Gallagher’s recent analysis, “De-Risking Supply Chains: Reducing Exposure with Onshoring and Near-shoring,” noted that while these strategies can address some vulnerabilities, they may also create new risks if not managed carefully.
The report indicated that shifting to local or regional suppliers can help businesses avoid some of the delays and uncertainties associated with international logistics.
However, Gallagher pointed out that the process of onboarding new suppliers – often under time pressure – can result in insufficient due diligence. This may expose organisations to ethical and financial risks that could otherwise be avoided.
According to Gallagher’s 2025 Global Business Resiliency survey, nearly all surveyed business leaders who diversified their supplier base during the pandemic intend to maintain this approach.
Most respondents also believe that these changes have improved their ability to handle supply chain challenges.
The move towards local and regional supply chains does not eliminate all risks. Gallagher’s report highlighted that businesses may inadvertently source from regions with limited transparency regarding labour and environmental standards.
As regulatory frameworks evolve, companies are facing stricter requirements for supply chain oversight.
Australia, along with other major economies, has implemented mandatory reporting and disclosure rules. These include public registries to monitor the use of forced labour and increased penalties for non-compliance.
The expectation for companies to demonstrate robust supply chain governance is growing, not only from regulators but also from investors, employees, and customers.
Gallagher advised that due diligence across the entire supply chain is now a critical component of risk management.
Insurers are increasingly requiring documented evidence of supply chain oversight before providing directors’ and officers’ liability cover. Failure to meet these standards may result in reputational harm, legal exposure, and challenges in obtaining insurance.
Onshoring and near-shoring should be viewed as elements of a broader risk management strategy, Gallagher recommends.
Businesses are encouraged to investigate why certain suppliers can offer lower prices and to ensure their sourcing practices comply with legal and ethical standards.
Transparency remains a significant challenge, particularly when supply chains span multiple jurisdictions with varying regulations.
Insurers are placing greater emphasis on ethical supply chain practices as a factor in underwriting decisions.
Gallagher suggested that organisations adopt adaptive risk governance models that can respond to changing circumstances and support long-term growth.
In a related development, Australian trade creditors are re-evaluating their insurance arrangements in light of increased tariff volatility and global trade uncertainty.
Lockton’s Sam Rodda, writing for the Australian Institute of Credit Management, outlined practical steps for credit professionals to navigate these risks, especially as local insolvency rates rise.
Rodda recommended that businesses begin by identifying customers whose operations are most affected by tariff-sensitive goods or supply chains. He noted that disruptions caused by tariffs can impact cash flow, even for customers who appear financially stable.
“Begin with identifying which customers depend on tariff-sensitive goods or supply chains. Asking the right questions can reveal hidden vulnerabilities before they become payment risks,” he said.
He also suggested using scenario modelling to forecast how tariff adjustments might affect client operations and to inform credit decisions.
Reviewing and updating trade credit and business interruption insurance policies is advised, as existing coverage may not fully address the financial impact of tariffs.
Rodda further emphasised the value of early communication with customers regarding tariff impacts.
