Trends, Takeaways, and Chances for Growth: Europe’s Supplier and Private Company Risk Landscape

This issue's key takeaways:

• Macro-level trends and a challenging economic landscape have strained supply chains
• In Europe, public and private company financial health has gone down
• Financial health informs all risk domains
• Detecting supply chain risk is key to effectively managing it

Risk trivia:

Since this issue looks at the impact of current macroeconomic trends on supply chains and financial health, let’s stay in that vicinity for today’s risk trivia.

When was the term macroeconomics introduced, and by whom?

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Snapshot: The overlooked advantages of managing risk

By James H. Gellert, Executive Chair, RapidRatings

Managing a healthy supply chain is challenging even when global economies are strong and geopolitics are stable. In today’s uncertain environment, it’s significantly harder.

The current supply chain landscape is unprecedented.

Procurement and supply chain risk professionals, along with colleagues at financial institutions, face a volatile environment marked by complex, converging obstacles. However, these disruptions also create unique opportunities for those who can navigate them deftly.

Today’s newsletter focuses on macro trends affecting public and private companies in Europe, the impact financial health has on all risk domains, and why a risk management strategy does more than simply help companies avoid supply chain disruption and financial catastrophe – it helps create resiliency and working capital efficiency that benefit the overall commercial business of enterprises that execute well.

Why Europe for this newsletter? I am currently in Vienna, Austria, attending the ProcureCon Europe conference amidst hundreds of Chief Procurement Officers and their teams from many of the largest companies around the world, so addressing risk in Europe is especially top of mind.

Macro trend volatility

There are many factors responsible for the volatility facing public and private companies in both the US and Europe. Here’s a quick overview of trends and the impacts they are having.

• Tariffs: Trump’s tariffs have raised supply chain costs, increased economic uncertainty, and made it difficult for companies to adjust strategically.
• Disruptions: From geopolitical and labor upheaval to weather events and logistics, supply chains have faced disruptions from multiple directions.
• Working capital constraints: Widespread uncertainty leads to conservatism that hinders growth. Even the most profitable companies are conserving working capital and the less profitable are looking for every way to stretch their dollars. Both have supply chain implications.
• Credit markets: Access to capital will be key for many private companies in need of liquidity to get through challenging times. The cost of capital for most is higher due to being floating rate borrowers. Capital costs more today than it has for the past 15 years, notwithstanding the recent small Fed rate cut. Most private companies borrow on a floating rate basis, and most private credit is lent the same.  
• Economic signals and policy: The Fed’s recent cut to interest rates underscores the tumultuous nature of this period, highlighted by inconsistent economic data and unprecedented political pressure on the Fed.  It’s unclear when, and how much, the next rate cut will be, but it is clear that absolute rates will stay high for the foreseeable future.

Broad effects of the current financial landscape

The ripple-effect of these trends has impacted companies financially in several ways. Moreover, these volatile factors are coming at a time when private companies (and many public as well) have seen material financial health declines since the beginning of COVID to now.  

One clear indicator of financial pressure is the number of corporate bankruptcies. Bankruptcy filings around the world are up, with 2025 on track to be higher than 2024, which was the highest since 2010.

The uptick in bankruptcies dovetails with regression in Financial Health for public and private European companies as well as in major financial metrics.  As in the US, Private companies in particular have been hit hard by revenue pressure as well as higher costs of labor, goods and capital. Public companies have been more resilient overall, while private company suppliers represent massive hidden risks.

Private, middle-market, companies in Europe have seen a significant increase in companies rated High Risk and Very High Risk, the FHR categories at 40 and below on our 100pt scale. At YE 2019 (pre COVID), the percentage of European High and Very High Risk companies was 25%. In 2025, we currently sit at 46%.  

If we focus on Earnings before Interest, Tax, Depreciation, and Amortization (EBITDA), Net Profit After Tax, Leverage, and Interest Coverage, we see the following trends since 2019:

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This overall decrease (except in private company leverage, which increased) signals a weakened financial health reality that permeates across public and private companies and through the supply chains they comprise.

Financial health informs all risk domains

It’s important to reinforce how vital financial health is to a company’s overall performance, productivity, and resilience.

A company with strong financial health will not only be more resilient and reliable, it will be able to sustain a higher level of innovation and growth.

Companies in poor financial health are exposed to the opposite trajectory: less resilience, fewer pathways to innovation, increased risk across the entire operation.

Viewing financial health strictly as a means to avoid bad outcomes isn’t wrong, but it’s an overly narrow view of what in reality is a diverse set of benefits it can deliver to organizations.  

Managing risk starts with identifying risk

You can’t fix a leak in your ceiling without locating the root cause. Mitigating financial risk is no different. To manage it effectively you have to identify the core issue clearly and early.

Here are some quick tips for building a risk management strategy that can identify risk and respond accordingly.

• Seek an enterprise mandate: Organization-wide buy-in ensures alignment and consistency across departments and embeds risk management as a core business priority.
• Understand supplier weaknesses and strengths: Be proactive about analyzing and understanding the overall portfolio of every supplier and how they fit into your risk management strategy.  
• Establish a systematic approach to Financial Health assessments: Support scalable and reliable processes by taking advantage of financial health tools that give you access to accurate, uniform data sets.
• Segment suppliers and criticality: Classifying suppliers by core characteristics will help decision-making around assessments, resource allocation, and contingency planning.
• Embrace the opportunity: The upside of a proactive risk management approach is greater than you might assume.

It’s not simply about avoiding a dramatic financial outcome, like bankruptcy. Risk management can unlock new opportunities for growth, by helping your organization:

• Obtain up-to-date private financial disclosure thereby accelerating digitization plans and modernizing financial risk management historically reliant on payment data.
• Collaborate more productively with suppliers.
• Turn insights into actionable strategies.
• Identify the strongest, help the weaker, re-source the weakest.
• Improve supply chain resiliency, portfolio risk management, working capital efficiency, and greater human capital efficiency.

The current risk landscape is indeed awash with challenges which are not going to magically disappear with the changing of the seasons or the calendar year. But there are ways to nurture innovation and growth which should not be overlooked.

Risk management is one of those ways.

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Trivia Answer:

Okay, so two answers here.

John Maynard Keynes is generally associated with introducing  macroeconomics as a concept and field of study in his 1936 book, The General Theory of Employment, Interest, and Money.

However, the term macroeconomics is credited to a Norwegian economist named Ragnar Frisch, who used the term several years earlier, in 1933.

High-fives all around.

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If you’re curious about how RapidRatings offers the most accurate and comprehensive financial data analytics in the industry, check out RapidRatings.com to learn more.