The US Commerce Department has prohibited component makers from selling to ZTE. The action has caused the stock of various component makers to drop. Acacia Communications Inc. (NASDAQ: ACIA) receives 30% of its total revenue from ZTE and saw its stock drop over 30%. Oclaro Inc (NASDAQ: OCLR), received 18% of its revenue from ZTE and experienced a drop of over 15%.
Implementing ISO 31000:2018 and assessing risk is one method of mitigating the effects of losing a supplier. Clause 6.4.2 tasks the organization with identifying uncertainties. Geopolitical activities would be indicators of emerging risks. The recent political change in the USA would need to be evaluated. Clause 6.5 discusses risk treatment. In this case diversification of the customer base to mitigate the loss of a single customer could be undertaken by the organizational leadership. Insurance against geopolitical events would also be a way of reducing the impact of losing customers.
Structural issues with the organization my continue for many years before a geopolitical event may disrupt your business. We recommend assessing risks and opportunities periodically during the business cycle and taking long and short term measures to exploit upside risk while minimizing downside risk.