The Crisis In Venezuela Generates New Level Of Geopolitical Risk Complexity

The capture of Venezuela’s President Nicolás Maduro by US military personnel should not come as a surprise to international observers. The writing was on the wall: US vessels took strategic positions off the coast of Venezuela and sank Venezuelan boats in the Caribbean in 2025. For firms with interests in the region, the immediate implication of Maduro’s removal from power is the need to re-assess their risk exposure. Meanwhile, the most significant long-term outcomes of the US attack are likely to manifest in unintended consequences, such as new geopolitical tensions elsewhere and/or an extended presence of US troops in Latin America. Corporate risk leaders should re-visit their strategies and scenario modelling in areas of complex geopolitical risk.

US intervention in Latin America is not new. Rooted deeply in the US diplomacy playbook is the Roosevelt Corollary of the Monroe Doctrine, which justified action to block foreign influence. Under this approach, the US intervened in Colombia (1904), Chile (1973) and Grenada (1983), to mention just a few. In 1989, after a military operation, the US tried and convicted Panama’s president Manuel Antonio Noriega on drug trafficking charges.

Notwithstanding the questionable morality and legality of US actions – as well as Maduro’s contested legitimacy in office – this weekend’s operation had two objectives:

• Control of the region. Under the rule of Maduro’s mentor, Hugo Chavez, Venezuela nationalized foreign-owned assets and organizations, which resulted in sanctions. Venezuela circumvented these by swapping oil for investment and military resources from China and Russia. These deals struck too close to home for Washington.
• Secure access to heavy oil. US refineries in Texas and Louisiana are designed to refine heavy oil – needed to produce diesel and jet fuel – which is also the type of oil found in Venezuela. Heavy oil inventories in the US are starting to run low, according to a weekly report by the US Energy Information Administration. While Venezuela’s 2025 output is significantly lower than decades past, its vast untapped reserves would ensure future US crude supply.

Following the operation, US authorities have claimed that they will “run the country”. The key objective here would be to ensure the return of nationalized assets to US organizations. However, the reality is not so simple:

• There is the issue of outstanding legal claims. US firms, expelled from Venezuela almost two decades ago, will seek to claim those assets and would become senior creditors. However, the change in priorities could cause Venezuela to default on Chinese debt. This would put additional pressure on relations between China and the US, while sending the Chinese financial market into chaos.
• Returning nationalized assets to foreign firms would require a Venezuelan constitutional amendment. This would ensure US investment and ownership is guaranteed under Venezuelan law, but it would take time. While protection can be provided by boots on the ground, this opens a door for a long-term engagement, and US history offers cautionary tales ranging from Vietnam to Iraq to Afghanistan. Admittedly, interventions in Latin America have historically been short – but not without social and humanitarian consequences.

On a wider level, perhaps the key issue is that the removal of Maduro undermines international law and encourages Putin-style diplomacy, especially in geopolitical hotspots. Accordingly, Russia could use this event to harden its stance against Ukraine. In Asia, Taiwan may be gearing up its defences as China could also follow the US example. Canada, Cuba, Panama and Greenland are all likely to be concerned about similar US actions against their countries.

The upshot for firms – not only with interests in the region but also in other areas of geopolitical tension – is the need to re-think the value-at-risk models to assess their exposure. In addition, organizations need to actively monitor local and regional tensions through their risk intelligence systems so they can take a proactive stance. Lastly, CROs should re-run their scenario modelling to better understand if their contingencies remain adequate to ensure resilience.

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