Hybrid Warfare, Defense and Business: Why Insecurity Is Already Reshaping the Global Economy
Business | Geopolitics and the Economy
European governments are urging citizens to prepare for crises, while cyberattacks, undersea cables and Taiwan’s semiconductor dominance expose the fragility of global supply chains.
10-minute read
The warning signs can sound dramatic: European governments advising households to keep food, water and basic supplies for the first days of an emergency; civil-defense and military exercises; growing concern about cyberattacks, sabotage and undersea cables; and the possibility of simultaneous pressure involving Russia, China, the United States and Taiwan.
Yet there is an objective reality behind the alarm. Security is no longer a subject reserved for diplomats and generals. It is influencing investment decisions, insurance, logistics, technology, energy, manufacturing and corporate planning. The relevant question for business is not whether a world war is about to begin. There is not enough public evidence to make that claim. The more useful question is this: what happens when companies and governments must operate in an environment where military, cyber, trade and political crises overlap?
The answer starts with a change in the meaning of risk. For decades, many companies treated geopolitical stability as a nearly permanent condition. They could concentrate production in a few countries, rely on efficient shipping routes, buy components from a dominant supplier and operate with relatively lean inventories. That model lowered costs, but it also concentrated vulnerabilities.
Pure efficiency is now being replaced by a more expensive combination of efficiency and resilience. Having two suppliers may cost more than having one. Carrying larger inventories ties up capital. Producing closer to customers can raise unit costs. Even so, these alternatives may prevent a complete shutdown when a border closes, a port is disrupted, a digital system is breached or a sanction changes the rules of trade.
What Europe Is Doing — and What It Really Means
In March 2025, the European Union adopted a preparedness strategy for crises. The document is not focused only on a possible military invasion. It takes a broader approach that includes geopolitical tensions, cybersecurity, information manipulation, climate change and natural disasters.
One of its measures is guidance aimed at achieving a minimum of 72 hours of household self-sufficiency. That does not mean the European Commission expects an imminent war. The logic is closer to insurance: basic preparation can reduce the impact of many kinds of crises, from a blackout or flood to a supply interruption or a security emergency.
The recommendation also shows how the meaning of defense has changed. A resilient society must keep hospitals, water, power, telecommunications, transportation and government operating under pressure. The private sector is central to that effort because companies operate much of the critical infrastructure on which society depends.
NATO describes civil resilience as the ability to prepare for, resist, respond to and quickly recover from shocks. The organization says civil preparedness has three core functions: ensuring continuity of government, maintaining essential services for the population and supporting military operations.
The numbers help illustrate the dependence between defense and the economy. According to NATO, approximately 90% of military transportation for large operations is provided by civilian assets that are contracted or requisitioned. More than 70% of satellite communications used for defense come from the commercial sector. About 95% of transatlantic internet traffic travels through undersea fiber-optic cables, most of which are owned and operated by private companies.
For a company, this means risk management cannot stop at its office, factory or data center. An outage at a cloud provider, telecommunications carrier, logistics company or shipping route can affect operations even when the company’s own assets remain intact.
Hybrid Warfare: Conflict That Does Not Have to Begin With a Missile
The term “hybrid warfare” is used in different ways, but it has a common core: combining military and nonmilitary, overt and covert instruments to pressure or destabilize an adversary. These instruments can include disinformation, economic pressure, espionage, cyberattacks, sabotage, political interference and the use of proxy groups.
A Congressional Research Service report describes activities attributed to Russian agents in Europe that include sabotage, assassinations, political interference, cyberattacks, airspace violations, GPS jamming and damage to underwater infrastructure. The report also emphasizes attributional ambiguity: many operations are designed to make definitive attribution difficult and limit the target’s ability to respond.
This ambiguity matters to business. A conventional attack usually produces a clearer political reaction. A digital disruption, disinformation campaign or damaged undersea cable may initially be treated as an accident, ordinary crime, technical failure or isolated incident. While governments investigate, companies face concrete losses: unavailable services, delayed contracts, distrustful customers and higher security costs.
The 2026 report from ENISA, the European Union Agency for Cybersecurity, analyzed 4,875 incidents observed between July 2024 and June 2025. Distributed denial-of-service attacks, known as DDoS, accounted for 77% of the recorded incidents. Ransomware was identified as the most impactful threat, while phishing and vulnerability exploitation were the leading entry points.
The most important finding for companies may be the concentration of targets. Public administration accounted for 38.2% of targeted sectors, but transportation, digital infrastructure, finance and manufacturing also ranked among the most targeted. The problem does not end with the company directly attacked. In a connected economy, an incident can move through the supplier network, affecting customers, distributors and business partners.
Artificial Intelligence Increases the Speed — for Companies and Criminals
ENISA says malicious groups are already using AI tools to improve phishing campaigns and automate social engineering. The agency also draws attention to attacks against the AI supply chain itself. That means risk is not limited to the model a company uses. It also extends to data, software libraries, APIs, cloud providers and the components that support the system.
A compromised everyday device is enough to illustrate the business lesson: ordinary objects can be connected to important systems. A commercial freezer, a refrigerated warehouse, an industrial controller or hospital equipment can become an entry point for a wider disruption if it is poorly protected.
The answer, however, is not to buy technology impulsively. Companies need to map which services are truly critical, who has access to them, how long operations can continue manually and which suppliers create the greatest concentration of risk. Asking “do we have a backup?” is not enough. Organizations need to know whether the backup is isolated, whether it can be restored and whether the recovery process has actually been tested.
Taiwan: The Economic Risk Hidden in a Small Territory
Taiwan is the second major part of this discussion. The island occupies a central position in the production of advanced semiconductors, components used in smartphones, computers, vehicles, industrial systems, telecommunications equipment and artificial-intelligence applications.
A study by the U.S. International Trade Commission estimated that, in 2021, about 44.2% of U.S. imports of logic chips were manufactured in Taiwan. In a hypothetical scenario involving a major disruption to Taiwanese production, the study calculated that logic-chip prices could rise by as much as 59% for U.S. producers, while domestic production would increase by only about 5% because of capacity constraints.
These figures are not a prediction of war. They are a simulation designed to measure vulnerability. The conclusion is straightforward: even a large, technologically advanced economy could not quickly replace the lost supply. Building semiconductor factories takes years, requires large amounts of power and water and depends on specialized equipment, workers and suppliers.
TSMC reported in its 2025 annual report that it manufactured 12,682 different products for 534 customers and managed capacity above 17 million 12-inch-equivalent wafers. The company also reported that 3-nanometer technologies represented 24% of its wafer revenue during the year. This scale explains why geographic diversification is desirable but difficult to achieve quickly.
For consumers, a shock in Taiwan could appear as delayed electronics deliveries, higher prices and lower availability of vehicles and equipment. For companies, the effects would be broader: contract reviews, emergency searches for alternative components, working-capital pressure, product redesign and competition for manufacturing capacity.
There is also a financial effect. When perceived risk rises, investors demand higher returns to finance projects in vulnerable regions. Insurers recalculate premiums. Banks may impose stricter terms. Companies whose revenue is concentrated in one region may be valued at a discount. In that sense, geopolitics enters the balance sheet.
China: Growth, Overcapacity and Pressure to Find New Markets
China faces a complex economic transition. The International Monetary Fund says China’s economy remains resilient and accounted for roughly 30% of global growth in the three years preceding its 2026 assessment. At the same time, the organization points to challenges linked to the property crisis, debt, consumer confidence and the need to rebalance growth toward domestic consumption.
The debate over industrial overcapacity has also intensified. When production grows faster than domestic demand, companies may look abroad to sell excess inventory. That puts pressure on prices, triggers trade responses and increases competition in sectors such as electric vehicles, batteries, solar panels and machinery.
It would be wrong to conclude automatically that economic difficulties cause a government to start a war. The relationship between economics and foreign policy is more complicated. A leadership may use nationalism to strengthen domestic support, but it may also avoid a military crisis precisely because it understands the economic cost. A conflict in the Taiwan Strait would disrupt trade, finance, technology and energy, including for China itself.
For executives, the implication is not to bet on one scenario. It is to build plans that work across different levels of tension: export controls, tariffs, financial sanctions, shipping blockades, cyberattacks or prolonged supplier disruption. An organization that prepares only for the worst case may overspend; one that prepares for no case may be left without options.
How Business Decisions Are Changing
The first change is a review of the supply chain. Companies should identify components with no quick substitute, suppliers concentrated in one region and routes that depend on a single port, canal or cable. The goal is not to eliminate every dependency — that would be impossible — but to understand where an interruption would have a disproportionate effect.
The second is to treat cybersecurity as operational continuity, not merely as an information-technology function. Boards need to understand which systems would stop a factory, interrupt payments, prevent deliveries or expose customer data. Security must be considered when acquiring technology, integrating systems, hiring third parties and designing connected products.
The third is to update contracts. Force-majeure, sanctions, supply interruption, data-protection and incident-notification clauses need to reflect a less stable world. It is also important to define who has authority to make decisions during a crisis. A slow response can cost more than the original incident.
The fourth is to view inventory and redundancy as investments. Additional inventory should not be created indiscriminately. It should be calculated based on the time required to find an alternative, the cost of a shutdown and the cost of tying up capital. In critical industries, two partially redundant suppliers may be more valuable than one cheap, highly efficient supplier.
The fifth is to invest in communication. Hybrid warfare also targets trust. A company that communicates poorly about a breach, product shortage or service outage can turn an operational problem into a reputational crisis. Clear, verifiable and timely messages help reduce rumors and protect relationships with customers, employees, suppliers and investors.
Business Preparedness Checklist
Map the five suppliers and services whose interruption would cause the greatest damage.
Calculate how many days operations could continue without critical digital systems.
Test backup restoration and manual operating procedures.
Review dependencies on Taiwan, China, Russia, shipping routes and cloud providers.
Include cyberattack, sanctions, tariffs, blackout and logistics-disruption scenarios in planning.
Define spokespersons and communication procedures for a crisis.
Preparedness Is Not Alarmism
The most important point is to avoid two symmetrical mistakes. The first is to treat every government warning as proof that a global war is scheduled to begin. The second is to ignore objective signals because previous forecasts did not materialize.
Preparing a household to manage for 72 hours does not mean believing the world is about to end. Likewise, diversifying suppliers does not mean predicting an invasion. It means recognizing that societies and companies operate in interdependent systems where a small disruption can produce a large effect.
The global economy is not necessarily on the edge of collapse. It is, however, less tolerant of shocks. Security costs are rising, supply chains are being redesigned, governments are discussing strategic stockpiles again and companies must balance price with continuity. That is the central connection between geopolitics and business.
For the general public, the practical lesson is to follow reliable sources, distrust videos that present scenarios as certainties and understand that security also involves energy, data, food, medicine, payments and jobs. For companies, the lesson is even more concrete: resilience is no longer just a reputation issue. It is a condition of operational survival.
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