How are leading companies managing today’s political risks?
Our 8th annual political risk survey found that for 74% of globalized companies who took part in the survey, political risks appear among the top five risks on the enterprise risk management (ERM) risk register. For 11% of respondents, it was the number one risk.
In the world of political risk, 2023 was the year of Russia (in which companies recognized their losses stemming from the Russia-Ukraine conflict); 2024 was the year of the Middle East; and 2025 (so far) the year of the United States. Last year, nearly 40% of our survey respondents said they had experienced a negative financial impact from the conflict in the Middle East – in most cases, due to disruption of supply chains. This year, nearly 60% said they expected the trade conflicts of the incoming Trump administration to have a negative impact on their finances. That was a similar proportion to those saying the Ukraine conflict had negatively impacted their business in 2023.
74% of respondents said that political risk was among the top five risks on the organization’s risk register
“This kind of uncertainty is difficult for a company of our size,” noted an electronics executive based in Europe, speaking about the new administration’s trade policies. “This situation is now shaping our discussions on where we establish our regional footprint going forward.”
This shift towards U.S. policy as a driver of political risk is not as new as it might at first appear. As far back as 2021, the United States appeared on our annual top ten list of countries where companies experienced political risk losses. At the time, the losses were driven by U.S. export controls imposed against China (which negatively impacted U.S. microchip manufacturers) and U.S. secondary sanctions imposed on Iran (mostly impacting European and Asian companies with investments in or trading relationships with Iran).
But the risks from U.S. policy in 2025 are new, resulting largely from President Donald Trump’s aggressive trade actions; the administration, in its first week, announced tariffs on Mexico and Canada impacting more than $1 trillion in global trade, and threatened tariffs against the BRICs that could impact a further $1 trillion in trade.
58% of respondents expect trade wars to have a negative financial impact on their organization in 2025
So far, the most acute risk is to companies caught in the tariff crossfire: while the Trump administration’s tariffs tend to be imposed across the board (with exemptions), foreign retaliation tends to be sector-specific. In addition, foreign retaliation can cross from trade into other areas. Threats by Canada to increase electricity prices were walked back, but China appeared to take several retaliatory actions against U.S. companies operating in the country. Both the EU and Canada, meanwhile, targeted specific U.S. sectors for tariff retaliation, which, unless these trade conflicts are resolved, is likely to result in large losses in those sectors.
As always, our research includes not only multiple-choice survey questions about geopolitical trends but also in-depth interviews on emerging risks.
For 2025, uncertainty related to U.S. policy tops the list of threats. The incoming administration has made extensive use of tariffs as a bargaining tool, which makes it difficult to predict where the final levels will end up. The second risk is a variation on that theme, as the new administration has made various threats against key U.S. allies, from Colombia and Panama to Ukraine and Denmark.
The full results can be accessed via the form on the right. We hope you enjoy this edition of our political risk survey and find the contributions of these expert analysts to be as valuable and thought-provoking as we have. If you have any questions please do get in touch.
