Every geopolitical shock eventually finds its way into a bank’s cost base, and the current Middle East conflict is no exception. However, what is different this time is how quickly the disruption has started to translate into operational and supplier cost pressures. This is reflected in energy bills, supplier contracts, cyber exposure, insurance premiums, and operational risk frameworks. And, as with previous crises, Procurement sits right at the centre of how effectively banks absorb or manage that impact.

Below are the top material cost and risk pressure points emerging for banks and other financial institutions based on current data and CASME member insights. 

Energy, Facilities Management and data centres

The disruption to flows through the Strait of Hormuz, representing approximately a quarter of the global seaborne oil trade and a significant share of liquefied natural gas (LNG) and fertiliser, has triggered a sustained energy repricing cycle.

Market and central bank forecasts continue to reflect this reality, with oil and gas expectations for 2026 materially higher than the pre‑war baselines.

For banks, this impacts:

• Data centres and cloud services: energy‑intensive by design, now facing immediate cost pressures.
• Facilities management (FM): heating, cooling and building operations repricing.
• Outsourced services: suppliers activating energy‑linked clauses in critical contracts. 
• Impact assessment: now versus later

Now: suppliers pushing energy surcharges, tightening price validity, reopening indexation clauses. 

Later: deferred efficiency investments, higher Scope 2/3 emissions and structurally higher run costs.

What Procurement can do

1. Map all contracts with energy indexation or pass‑through mechanisms. 
2. Push for clear caps and transparent indexation formulas - avoid open‑ended exposure.
3. Prioritise renegotiation where cost exposure is both material and immediate. 

Freight, logistics and cash handling

While banks are not heavy shippers, they are far from immune.

War‑risk surcharges remain in place across multiple shipping and aviation routes (often in the $1,500–$3,000 per container range on affected lanes) alongside surging marine insurance premiums.

For banks, exposure sits in less obvious places:

• Cash logistics and secure transportation. 
• Technology hardware and infrastructure.
• Specialised equipment, supplies and operational materials that move by sea or air. 
• Impact assessment: now versus later

Now: higher landed costs, longer lead times, rerouted supply chains. 

Later: early structural shifts in logistics networks and vendor footprints as routes normalise or re‑route.

What Procurement can do

1. Identify categories with embedded freight exposure (often hidden in supplier pricing). 
2. Challenge blanket 'war' surcharges by requiring evidence and time limits.

3. Revisit International Commercial Terms and cost allocation models.

    

IT, cloud and cyber risk

Regulators and cyber agencies have flagged elevated Iran‑linked cyber risk, with financial institutions viewed as priority targets, on top of an already rising baseline – CASME's previous research and recent threat‑intel data point to a steep increase in activity from Iranian‑linked groups over the past year.

Impact assessment: now versus later

Now: more stringent vendor due diligence, and increased requirements around logging, monitoring and data controls in IT and cloud contracts.

Later: rising cyber insurance costs and tighter underwriting conditions tied to third‑party risk maturity.

What Procurement can do

1. Tighten minimum cyber and TPRM standards across all critical suppliers.
2. Align contract language with InfoSec and risk teams so that third‑party terms truly match the bank’s cyber and TPRM policies.
3. Refresh due diligence questionnaire (DDQs) to explicitly address geopolitical threat vectors.

Legal, compliance and sanctions

Sanctions regimes continue to evolve across jurisdictions, creating ongoing uncertainty for banks operating internationally.

The more material risk for banks is not direct exposure, but indirect exposure via clients, counterparties, suppliers and trade routes.

Impact assessment: now versus later

Now: surge in demand for legal, sanctions and advisory services; increased scrutiny of onboarding and transaction routing, and a continued stress test of whether the bank can quickly surface the right clauses across thousands of contracts. For many institutions, this is exactly the moment to stress‑test existing contract search tools and make the business case for a Gen‑AI‑powered contract and clause repository.

Later: enforcement and reputational risk if controls fail; contract disputes where clauses are poorly defined.

What Procurement can do

1. Embed sanctions and geopolitical risk checks into supplier onboarding and reviews.
2. Standardise force majeure, sanctions and hardship clauses.
3. Involve Legal earlier in high‑risk renewals and sourcing decisions.

Business travel and duty of care

Travel disruption and route volatility continue to affect regional and international travel planning, with route changes, higher fares and increased risk‑related costs.

Some institutions have restricted travel into key hubs, while others are tightening approval processes.

Impact assessment: now versus later

Now: increased travel costs and widespread pauses on non‑essential trips, especially into higher‑risk hubs; active reviews of travel insurance and airline policies to understand which carriers offer the strongest rebooking and care obligations when flights are cancelled or rerouted; longer journey times and rapidly evolving risk ratings; where banks have staff based in the region, some are already activating or revisiting contracts for relocation, evacuation and secure temporary accommodation.

Later: hub reassessments and diversification strategies, with more emphasis on routing through lower‑risk locations and using virtual engagement where physical presence adds limited value.

What Procurement can do:

1. Update and communicate travel policies and approval frameworks with HR and Risk.
2. Ensure travel-management company (TMC) contracts reflect enhanced duty‑of‑care requirements, including support for relocation and emergency movement of employees where needed.
3. Separate war‑risk pricing components from baseline fares.
    

Insurance (direct and pass‑through)

War‑risk pricing remains elevated and volatile. Marine and aviation insurance markets are already repricing, with reduced coverage in some areas and sharply higher premiums.

This affects banks in two ways:

• Their own insurance programmes.
• Supplier pass‑through costs embedded in FM, logistics and travel contracts.
• Impact assessment: now versus later

Now: higher premiums and narrower terms.

Later: coverage gaps where legacy assumptions no longer hold.

What Procurement can do:

1. Work with Risk to map where insurance exposure is changing.
2. Challenge supplier assumptions on automatic pass‑through of premium increases.
3. Build clarity on who carries which risks and at what cost.
    

Other areas to consider

Beyond these areas, banking procurement teams should keep a close eye on food and catering costs. For example, as fertiliser and commodity-related inflation continues to work through supply chains, Procurement can prepare to revisit category targets. It will also be important to clearly communicate how the conflict is affecting the bank’s ESG trajectory, from higher‑emission routing and emergency energy choices to the social and governance implications of travel, duty of care and sanctions‑driven decisions. In parallel, teams should continue to monitor consulting and professional services, contingent workforce, events and TPRM tools, where demand spikes and supplier behaviour are likely to echo the patterns already emerging in energy, logistics, cyber, sanctions and insurance.
 

Final thought

Every crisis, and we saw this clearly with COVID, allows Procurement to step up and elevate the function. This ongoing conflict is another opportunity to be a leader that shapes the organisation’s resilience approach; driving Gen‑AI‑powered insight into third‑party exposure, hardening TPRM and contract frameworks, and partnering with Finance, Risk and IT so that the bank’s response is deliberate rather than reactive.

Discover More about CASME membership and how we support procurement teams across industry sectors.