Regional Supply Risk: Global Security Hotspots in 2009

I believe that one of the most under appreciated forms of supply risk is geographic instability. Consider in just the past year how Hugo Chavez continued to nationalize privately held businesses and suppliers, Russia flexed its natural resource muscle by cutting off energy to rivals in the EU and central Europe and Thailand has faced material unrest in Bangkok from protesters angry at the government. In each case, these political disruptions forced companies to temporarily close facilities and halt production or overshoot deadlines to get containers on the water or goods into the air. But where will the regional hotspots be in 2009? The CIA offers some clues in a recent informal intelligence memorandum covered by Fox News. According to the CIA, North Korea, Iran and Al Qaeda (and the countries in which it operates including Yemen and Somalia) are still top concerns for the intelligence community. But "violence in Mexico" is number two on the overall list (following Al Qaeda). Instability caused by low oil prices also has the potential to be a destabilizing factor in countries like Venezuela. China also makes the list because "it remains to be seen how this communist nation will weather an economic downturn and what conditions global recession will create internally."

- Jason Busch

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