Heightened geopolitical risks hitting trade, finance: Marsh

A heightened geopolitical risk environment, including volatility, uncertainty and a widening range of possible outcomes, has become a more significant driver of operational and strategic risks to trade, finance and investment than in prior periods, according to a report Monday from Marsh LLC.

Those doing business today have to contend with the reshaping of global trade, geopolitical risks and energy transition opportunities, the report said.

Businesses with long investment horizons, complex supply chains, or key supplier dependencies will likely continue to be tested by shifting global trade dynamics, the Marsh report said.

“Trade has indisputably been changed by increased trade interventions and conflict-induced disruptions,” the report said.

Geopolitical risks may create operational challenges for businesses and organizations. They may see operational difficulties increase due to their exposure to political risks, including conflict, volatile supply chains and proliferating investment regulations.

Increased climate compliance obligations, especially those originating from new EU regulations, may present operational risk challenges for organizations, such as the European Union’s Carbon Border Adjustment Mechanism.

“Regulations will increasingly require importers to track emissions and sourcing, or face penalties for misreporting,” the report said.