Hello 👋 get a brew on because these are the top emerging risks between June 2nd, and June 16th, 2025…
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1. Economic: China's rare earth magnet crisis shuts down global automotive plants.
China's April 2025 export licensing system for seven critical rare earth elements has triggered a global supply crisis, with 90% of processing capacity now requiring complex government approvals.
Ford shut Chicago Assembly Plant for 10 days, Suzuki suspended Swift production from May 26th, and multiple European suppliers halted operations entirely as executives describe "full panic" conditions.
Crisis exposes "just-in-time" vulnerabilities: U.S. companies hold only 2-3 months inventory, auto makers just 4-6 weeks of rare earth magnet stockpiles.
China's 90% processing dominance creates a single choke-point for everything from electric vehicles to wind turbines, leaving global supply chains critically exposed.
Lesson: diversification isn't optional. "China plus one" strategies prove inadequate, while Japan's successful reduction from 90% to 58% Chinese reliance shows strategic investment in supply resilience is possible but requires sustained commitment.
Sources
Global Supply Chains Under Siege: The Rare Earth Magnet Crisis | Devdiscourse | 03-06-2025
Rare earths shortage could cause pandemic-era disruptions, experts say | CNN Business | 10-06-2025
You should be concerned if…
Any automotive manufacturer or supplier dependent on electric vehicle motors, power steering systems, or fuel injection components is at immediate risk.
Technology companies producing devices with speakers, hard drives, or any motorised components (smartphones, laptops, appliances) face potential disruption.
Renewable energy companies developing wind turbines, solar panel tracking systems, or energy storage solutions rely heavily on rare earth magnets.
Aerospace and defence contractors using guidance systems, radar equipment, or electric aircraft components should assess their supply chain exposure.
Manufacturing companies with automated production lines using servo motors, robotic systems, or precision equipment need to evaluate their vulnerability.
These items are generic assumptions. We recommend considering your own unique risk landscape against your critical dependencies. If you don't know what they are, get in touch.
Preventative actions
Supply Chain Diversification:
Map all rare earth dependencies in your products and identify alternative suppliers outside China to reduce single-source risk.
Strategic Stockpiling:
Increase inventory levels from weeks to months for critical components, balancing cost against supply security.
Technology Innovation:
Invest in R&D for rare earth-free alternatives, following companies like General Motors and BMW developing minimal rare earth motors.
Recycling Programs:
Develop magnet-to-magnet recycling processes that can achieve up to 98% recovery rates for certain elements.
Partnership Development:
Form long-term relationships with alternative suppliers and participate in government-backed diversification initiatives.
Risk Assessment:
Conduct comprehensive mapping of all products and processes dependent on rare earth materials to understand true exposure.
Government Engagement:
Monitor and participate in national security initiatives supporting domestic rare earth production and processing capabilities.
2. Technological: Apple research exposes fundamental AI reasoning failures.
Apple's "The Illusion of Thinking" research reveals state-of-the-art AI models (OpenAI's o3-mini, Anthropic's Claude 3.7) lack true reasoning and suffer "complete accuracy collapse" on complex tasks.
Even when given correct algorithms for logical puzzles, AI models failed to improve performance, exposing fundamental limitations in logical consistency and execution.
ChatGPT's 34-hour June outage crippled millions globally, revealing dangerous enterprise dependencies across customer service, legal, finance, and analytics operations.
Critical disconnect: 78% of companies use AI operationally and 71% implement generative AI, yet 85% of AI models fail due to poor data quality and 73% face security breaches averaging $4.8 million.
Lesson: the "illusion of thinking" extends beyond AI models to executive decision-making, organisations need comprehensive governance frameworks treating AI as augmentation technology rather than replacement infrastructure, with robust failover strategies and realistic capability expectations.
Sources
You should be concerned if…
Any organization using AI for critical decision-making processes, financial analysis, or customer service operations faces potential systematic failures.
Companies building core business functions around AI-powered analytics, forecasting, or process automation risk operational disruption during service outages.
Enterprises implementing AI in healthcare, legal, or safety-critical applications where reasoning accuracy is essential need to reassess their risk exposure.
Financial services firms using AI for trading, fraud detection, or loan approval processes should evaluate their dependency on potentially flawed reasoning systems.
Businesses relying on single AI providers without failover strategies face significant continuity risks during extended outages like the recent ChatGPT disruption.
These items are generic assumptions. We recommend considering your own unique risk landscape against your critical dependencies. If you don't know what they are, get in touch.
Preventative actions
Multi-Vendor Diversification:
Architect AI workflows to failover between providers like Claude, Gemini, and local models during outages to ensure continuity.
Human Oversight Protocols:
Maintain human oversight for all critical AI-driven decisions and avoid full automation of essential business processes.
Local Caching Strategies:
Store results of common AI queries locally for fallback responses during service disruptions or performance issues.
Synthetic Monitoring:
Continuously validate AI endpoints with rapid detection capabilities to identify performance degradation or failures quickly.
Conventional Backup Systems:
Maintain traditional algorithmic solutions for critical operations that can function independently of AI services.
Technical Expertise Development:
Invest in developing internal technical expertise to properly assess and manage AI limitations and security risks.
Transparency Protocols:
Establish clear communication procedures for AI-related incidents and ensure stakeholders understand system dependencies and limitations.
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At Fixinc, we are passionate about helping people get through disasters. That’s why our team of Advisors bring you this resource free of charge. If you need help understanding these threats and building a plan against them, the same Advisors are here to help over a 30-minute online call. Once complete, if you like what was provided, you can choose to provide a donation or subscribe to Unreasonable Ventures to support this channel.
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