Global political risk is set to intensify in 2025, with analysts from Verisk Maplecroft warning of shifting alliances, escalating conflicts and the deepening impact of protectionism on global trade and supply chains. 

The firm’s latest analysis, presented during a recent webinar, outlines a “perfect storm” of geopolitical challenges that businesses and investors must navigate in the coming year.

“99 countries have witnessed a significant increase in political risk over the past three years,” said Jimena Blanco, chief analyst, global risk insight at Verisk, referring to the firm’s research. 

“It’s not just one factor, it’s actually a perfect storm of civil unrest, conflict, challenges to government authority, trade disputes, interstate tensions, resource nationalism, sanctions,” Blanco told the webinar on January 15. 

“All of these have the potential to converge at times or remain parallel but distinct risks at others.”

Blanco added: “there is one common thread stitching our political risk outlook together and that is the strategic competition between major powers creating this new baseline level of risk and uncertainty for businesses and investors.” 

This is set to intensify in 2025, as Donald Trump takes power in the US on January 20. 

“As President Trump takes office since again … the role of international trade as a geopolitical battleground is set to intensify as his proposed tariffs could upend international trade, place further pressure on glob and also potentially drive inflation in the US,” Blanco told the webinar organised by Verisk Maplecroft. 

Trade tensions to escalate 

Trade tensions are expected to escalate, with a new wave of tariffs and protectionist measures threatening to disrupt international commerce. Verisk analysts noted that harmful government interventions, including financial sanctions and domestic subsidies, have tripled since 2019, reshaping the global economic landscape. These measures are increasing costs for businesses, particularly in Western democracies, where trade disruptions are being felt most acutely.

Not all countries are the losers. The report singles out Mexico and Vietnam as countries that have emerged as key connector economies, benefiting from the fragmentation of global supply chains. However, they face political and labour rights challenges as they seek to solidify their roles in the global economy. 

Meanwhile, the broader trend of de-globalisation is adding significant costs to businesses and consumers, with supply chain inefficiencies and geopolitical rivalries driving inflation higher.

At the same time, Blanco said, “We expect to see alternative international institutions – be it the BRICS, be it the SCO – become increasingly relevant vehicles to offer an alternative world view to the one presented by the rules-based into international order, which has dominated for much of the past eight decades.” 

Escalating conflicts and increased exposure

Armed conflict has expanded dramatically, with the proportion of global landmass exposed to conflict increasing by 65% since 2021, according to Verisk’s Conflict Intensity Index of 198 countries and territories. Key conflict zones include Ukraine, the Middle East and sub-Saharan Africa, with the Sahel region witnessing the most significant territorial expansion.

“The headline takeaway from our data is that the global conflict risk have increased very significantly over the past four years,” said Hugo Brennan, head of EMEA, global risk insight at Verisk Maplecroft. 

The drivers of these conflicts are diverse, ranging from poor governance and socio-economic instability to the intensification of long-standing disputes. 

The firm’s latest Conflict Intensity Index highlights that nearly all of the worst-performing countries have seen their scores deteriorate over the past four years. The expansion of conflict-affected areas is exposing critical supply chains to heightened risks, particularly in sectors such as oil, gas and critical minerals.

“Global supply chains are … exposed to war risks, most notably the Houthis’ ongoing campaign to target shipping in the Red sea, the world’s busiest trade route, has disrupted supply chains and increased shipping costs,” said Brennan. 

Similarly, “the fallout from Russia Russia’s full scale invasion of Ukraine … roiled global supply chains from energy to fertiliser to agro commodities,” he added. 

The rise of protectionism

In countries around the world, protectionist policies are reshaping the global economic order, with state interventions and resource nationalism on the rise. 

“Global trade wars are back in focus following the 2024 US elections. However this de-globalisation trend and fundamental shift in the global economic landscape has been building for years, and is currently at levels not seen since the end of the Cold War,” said Reema Bhattacharya, head of Asia, global risk insights at Verisk Maplecroft. 

“These multidimensional disruptions [are] forcing a fundamental reset of long-standing strategies … protectionism is on the rise … harmful government  interventions, primarily new trade restrictions targeting goods and services, foreign investments and labour force migration, have increased sharply, more than tripling since 2019, soon after the US-China trade dispute entered high gear,” Bhattacharya said. 

Over the past five years, 72 countries have introduced significant interventionist policies, particularly in critical minerals and mining. Governments in Europe and North America are taking steps to secure supply chains essential to the green energy transition, aiming to reduce reliance on geopolitical rivals like China.

While these measures aim to bolster national security, they are also driving fragmentation in global energy markets. Verisk analysts expect more restrictions on trade with strategic competitors, further complicating the business environment for multinational corporations. Companies operating in high-risk jurisdictions face potential asset seizures and other interventionist actions.

Listed companies affected

Geopolitical tensions have the potential to affect large shares of companies listed on major global stock markets. European indices such as the DAX, CAC 40 and FTSE are particularly exposed, with significant assets located in geopolitically sensitive regions. 

S&P500, Nikkei 225 markets, while more domestically focused, face vulnerabilities in strategic sectors such as semiconductors and electronics.

At the same time, there has been a sharp increase in resource nationalism, especially in Europe, where Germany, Poland, Spain and the UK have all taken recent steps to tighten control over strategic resources. The US and Canada have taken similar steps, as well as teaming up with allied countries to diversify their supply chains away from China. 

Overall, said Blanco, “Operating globally is going to get tricker as geopolitical faultiness deepen”.