Geopolitical Volatility: From Globalisation to Fragmentation and the Future of Risk Management
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A decade ago, the world was defined by open trade, cross-border collaboration and seamless global supply chains. Businesses expanded with confidence, and risk managers focused mainly on financial, operational, and compliance risks. Geopolitics, though noted, often sat on the sidelines. However, that era is over. With the rise of protectionism, populism, and technological rivalry has transformed geopolitics into a daily business concern. Today, political decisions can ripple across markets overnight, disrupt supply chains, and reshape corporate strategy.
According to Aon’s latest Global Risk Management Survey, geopolitical volatility has surged into the top 10 business risks globally, ranking 9th this year and projected to climb to the 5th by 2028.
“The past year has demonstrated that executives need to adopt a decision-making framework for risk that can match the velocity of geopolitical events. This dynamic approach needs to be informed by analytics and contemplate the role of risk capital in offsetting the impact from these events,” said Richard Waterer, Global Risk Consulting Leader at Aon.
What is Driving the Change
One key driver, as highlighted in Aon’s 2025 Global Risk Management Survey, is the resurgence of regional conflicts. The Russia-Ukraine war and tensions in the Middle East continue to ripple through global markets, driving up energy prices and disrupting trade routes.
Houthi attacks on vessels in the Red Sea have increased shipping costs and insurance premiums, while renewed skirmishes such as the brief conflict between India and Pakistan highlight the fragility of regional stability. The spread of cheaper, easily accessible weapon systems across conflict zones further amplifies uncertainty, reinforcing why geopolitics has become a core business risk rather than a distant concern.
Building Resilience: How to Mitigate Geopolitical Risks
Vinit Prabhu, Head of Insurance at Vedanta Group and a Board Member of PARIMA, shared his insights on emerging geopolitical trends and his approach to building resilience amid disruptions.
“Building resilience is a continuous process, not something to begin only when adversity strikes. Our approach is to proactively develop alternatives and maintain backup plans — for people, suppliers, and customers alike. Always plan for the worst-case scenario but hope for the best.”
When asked how risk professionals can stay ahead of emerging geopolitical developments, Vinit emphasised the importance of staying connected to on-the-ground realities affecting businesses across sectors and geographies.
“Associations such as PARIMA, RIMS, and other industry bodies provide valuable, real-time insights into the latest developments. Staying engaged with these networks helps you stay informed and prepared.”
Lastly, Vinit believes that cultivating the right mindset is essential for today’s risk managers.
“Risks are evolving faster than ever, and new threats are emerging at unprecedented levels. It’s crucial for every risk manager to keep their eyes and ears open, to learn continuously, network widely, and adopt new skills. Only by doing so can we detect early warning signs in this highly interconnected world.”
Final Word
Organisations and their risk teams must move beyond reacting to isolated geopolitical shocks and take a proactive approach to resilience, embedding geopolitical awareness into strategy, operations, supply chains and financial planning. Risk managers can no longer view global events as background noise; they must translate political and economic shifts into actionable insights and early-warning indicators.
In today’s fragmented world, the ability to anticipate and adapt to geopolitical volatility is no longer optional but it is essential for protecting business continuity and enabling sustainable growth.
