Increased Geopolitical Tensions Threaten Supply Chains
Recent insights from Marsh’s Political Risk Report 2025 highlight that escalating geopolitical conflicts and protectionist trade policies are significantly endangering global supply chains. As multinationals and investors prepare for the coming year, understanding these risks becomes pivotal.
Connector Countries Under Scrutiny
Companies that rely on nations such as Vietnam, Mexico, South Korea, and Hungary to circumvent current or anticipated trade restrictions may encounter heightened disruptions. As diplomatic relations sour between major economies, new trade barriers targeting goods from these ‘connector countries’—especially those containing components from initial target nations—are expected, exacerbating supply chain instability.
Strategic Resilience Planning
To bolster resilience against these geopolitical shocks, organisations are advised to evaluate China’s trade strategy commitments and the underlying objectives of US trade policies. Additionally, assessing the sustainability of the connector country model in relation to their business operations is crucial.
Energy Transition Challenges and Opportunities
The report emphasizes that evolving market and political landscapes present both obstacles and prospects in the energy transition sector, aligning with the World Economic Forum’s Global Risks Report 2025, which forecasts environmental challenges as dominant over the next decade.
Although significant strides were made at COP29 and Decarbonisation and Finance for Nature Services (DFNS) initiatives have gathered momentum, hurdles remain—particularly concerning political risks and potential non-compliance. Moreover, emerging climate regulations, especially within the European Union, could introduce operational risks for businesses.
Expert Insights
Robert Perry, the Global Political Risks & Structured Credit Leader at Marsh Specialty, remarked, “The convergence of economic, geopolitical, and climatic risks creates a uniquely challenging operational environment. Organisations that enhance their risk assessment and mitigation capabilities are more likely to identify strategic opportunities, gaining a competitive advantage in these volatile times.”
