Introduction
Heightened global geopolitical tensions and protectionist trade strategies are putting organisations at greater risk of acute supply chain failure in 2025, according to a recent Marsh report.
Key Findings
Insurance broker Marsh’s Political Risk Report 2025 outlines key political and economic trends that will impact multinationals and investors in the coming year.
Trade and Supply Chain Risks
Organisations trading with connector countries such as Vietnam, Mexico, South Korea, and Hungary to bypass existing or anticipated trade controls—or have suppliers doing the same—may face greater trade policy-induced disruption in the months and years ahead. As relations between major trading partners deteriorate, governments may impose trade barriers on goods from connector countries, especially those containing components from the originally targeted country, further increasing global supply chain volatility.
Recommendations
To strengthen resilience against supply chain shocks resulting from the geopolitical landscape, the report advises organisations to review China’s commitment to its trade strategy, the US’s underlying trade policy objectives, and consider the extent to which the current connector model will be sustained as it applies to their business models.
Energy Transition Challenges and Opportunities
The report also underscores that shifting market and political dynamics present both energy transition challenges and opportunities, echoing the World Economic Forum’s Global Risks Report 2025, which predicts that environmental risks will dominate the next decade.
Climate Compliance and Operational Risks
While global CCMs made significant progress at COP29 and DFNSs have gained momentum, challenges remain—particularly around political risk and the potential for non-delivery. Additionally, increased climate compliance obligations, especially under new European Union regulations, may present operational risk challenges for organisations.
Expert Opinion
Robert Perry, Global Political Risks & Structured Credit Leader at Marsh Specialty, said, “Heightened risks around the economy, geopolitics, and the changing climate are creating an incredibly complex operating environment unlike any other organisations have experienced in decades. Those that build on their ability to comprehend, assess, and mitigate the risks facing their operations will likely be better positioned to identify opportunities where others may only see ambiguity and gain a competitive edge in these uncertain times.”
