SagaciousThink | Top of Mind for the Board, V1
Briefing | November 24, 2025
Rising Tensions in the South China Sea
1. What Happened
Tensions in the South China Sea escalated sharply this month and last. Philippine and Chinese naval vessels collided near Second Thomas Shoal during high-pressure maneuvers, part of an ongoing pattern of confrontations.
China expanded patrol zones while the Philippines filed diplomatic protests and requested allied support. Markets reacted with volatility in shipping, semiconductors, and energy. These incidents reflect sustained friction over strategic waterways carrying over $3 trillion in annual trade.
2. Why This Matters
Immediate Operational Risks:
Supply chains in electronics, automotive, and energy depend on lanes through this region
Shipping costs and insurance premiums could spike
Talent safety and mobility are affected for teams in the Philippines, Vietnam, Singapore, or Hong Kong
Strategic Risks:
Sanctions risk if disputes draw in U.S. or EU export controls on dual-use technologies
Market expansion plans in Asia need scenario adjustments
Cyber risks spike during geopolitical friction
JV and M&A valuations may shift rapidly
Boards should treat this as operational and strategic risk, not a distant political event. Smaller boards without geopolitical analysts need external expertise to navigate these dynamics.
3. Questions Directors Should Ask This Week
What exposure do we have in the South China Sea region—direct or indirect?
How would a two-week or two-month disruption of shipping routes affect production, sales, or inventory?
Does our supply chain have redundancy outside East and Southeast Asia?
Are we vulnerable to sanctions spillover or export-control actions?
Has management modeled cost sensitivity on rerouting logistics?
Do our cyber protections assume increased state-backed activity?
Should we commission an updated geopolitical risk assessment from regional experts?
4. Near-Term Board Actions
Governance-Level:
Request management exposure map: suppliers, logistics, cost concentrations, customers
Run geo-risk tabletop exercise with management
Review cybersecurity posture for elevated threat activity
Operational:
Pre-authorize temporary shipping route or freight contract adjustments
Prepare stakeholder messaging if operations or timelines are affected
Strategic:
Pause or reassess expansion, JV, or M&A in highly exposed markets
What We're Watching
U.S.-China semiconductor export controls
AUKUS defense coordination shifts
ASEAN diplomatic positioning
Insurance market responses to maritime risk
SagaciousThink leads in SMB operations, strategy, and corporate governance. This inaugural "Top of Mind for the Board" briefing helps