Geopolitical Risk: War In A Blink Of An Eye?

Geopolitical Risk: War In A Blink Of An Eye?

Over the last couple of years, the world has suffered from a number of threats: trade war, armed conflicts between different countries or regions, and the increasing prominence of several totalitarian regimes. However, the implications and consequences of these do not only affect the countries involved. For example:

• Ongoing conflict in Ukraine has caused major disruptions to the global food and energy markets, leading to higher prices and shortages around the world.
• Trade war between the US and China has disrupted global supply chains and made it more expensive for businesses to operate.
• Political instability in Venezuela has led to a humanitarian crisis, with millions of people fleeing the country in search of food and safety.

In our most recent corporate risk survey, we asked 200 risk executives round the word about the main risks to which they are exposed. Twenty per cent of the respondents mentioned geopolitical risk as a major concern.

Geopolitical events can have far-reaching consequences, impacting not only the nations involved, but regions and other countries that trade with them, as a result of:

• Humanitarian crises: leading to mass displacement and movement of refugees.
• Economic impact: resulting in financial instability and uncertainty, and supply chain disruption.
• Political instability: prompting security concerns, constant threats (physical or digital), and disturbances to international peace.

Now, the attacks in the Middle East have compromised the relatively fragile peace and stability of that region once again.

The recent events in the Middle East will have a direct impact on the stability of the region in the short- and mid-term, and look set to increase political tensions between global power nations. From a business perspective, this volatility will naturally be translated into the markets – especially those for energy.

Verdantix will continue to monitor the evolution of this situation.