This quarter marks three years since Russia invaded Ukraine, in what was the first full-scale invasion of a European country by another since World War II, the first to prompt unified Western economic sanctions of the magnitude we have seen, and the first use of cyber warfare at this scale in a European conflict.

Readers of this magazine will be all too familiar with the geopolitical risks emanating from the
war in the intervening time; the plans and contingencies drawn up as war broke out, and since changed to reflect the constantly evolving dynamics; and the insurance facilities designed by the market to address previously uninsurable risks in war-torn Ukraine.

Along with the ongoing conflict in the Middle East, Ukraine is among the most intense war zones in the world, but neither represents isolated skirmishes. Conflict-affected areas across the world have grown some 65% since 2021 to encompass almost 5% of the entire global landmass, up from 2.8%, according to data from Maplecroft. That equates to over six million km² – or an area nearly double the size of India – that is now affected by fighting between or within states. The consequences of this surge in conflict zones have significant human and economic costs – from rising casualty numbers (up 29 per cent on 2021) and increased migration to escalating geopolitical and trade risks.

In total, some 27 countries, including the emerging markets of Ecuador, Colombia, India, Indonesia and Thailand, have experienced a significant increase in conflict-related risk since 2021 – with sub-Saharan Africa the worst affected.

The Middle East is one of the key drivers in the upward global conflict trend. According to Verisk’s latest Political Risk Outlook, Israel, the Palestinian Territories, Lebanon, Syria and Yemen are all now ranked among the 10 highest risk jurisdictions globally.

In addition to this surge in armed conflict, political instability and escalating diplomatic and trade tensions are contributing to a rise in the cost of doing business – to what Verisk’s data suggests is a ten-year high. Companies within major western economies and their allies are the most affected, according to the data, and the trend has only accelerated since the Trump administration’s announcements prompted tit-for-tat measures from China.

The implications are not limited to macro-level issues. Verisk’s data suggests that harmful policy interventions linked to deglobalisation have adversely affected business costs across major economies, including the UK, the US, Germany, Japan and South Korea, with some estimates suggesting the trade war’s cumulative impact on the global economy from 2018 to 2023 at between US$1.5trn and US$2trn.

Verisk’s experts forecast that these ongoing shifts will demand a more rigorous examination of the origins of raw materials, the countries where goods are manufactured, and the locations of services and logistics hubs. It anticipates that global economies will increasingly realign into three blocs: one led by the US, one by China, and a third comprising other nations.

Rising operational and supply chain costs stemming from growing protectionism could further erode corporate margins and competitiveness, especially for companies headquartered outside the US. While these shifts could be good news for connector economies, such as Mexico and Vietnam, changes in the global trade landscape will still challenge organisations – particularly those companies and supply chains that rely on international exports.

As businesses navigate this era of heightened geopolitical and economic uncertainty, risk professionals are increasingly integrating geopolitical risk considerations across all segments of their value chain, to navigate what most commentators agree are further turbulent years ahead.




This article was published in the Q1 2025 issue of CIR Magazine.

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