Geopolitical risk spikes leave business leaders fearing war and inflation

Beazley’s latest Risk & Resilience research into geopolitical risk, shows that events so far this year have significantly altered business leaders’ perceptions of the risks they face and their resilience to those risks, which has fallen dramatically since 2021.

The impact of inflation is also causing deep concerns about domestic stability alongside the fear that global tensions are increasing the threat from external forces. As business struggles to adjust to this new reality, preparedness and mitigation strategies are becoming a key focus.

Beazley’s new report  Spotlight on Geopolitical Risks shows that across the UK and US, few business leaders feel well able to manage current geopolitical risks. Concerns about the possible consequences of war are spiking upwards compared with last year, and in the first year we have asked the question, inflation has become a dominant issue.

The report’s results paint a troubling picture. It notes that it is urgent that businesses build resilience to a high risk/low resilience geopolitical environment. It identifies inflation as a dominant threat with 55% of business leaders believing they lack the necessary resilience to deal with it, which rises to 65% in the US.

The proportion of business leaders ranking war and terror as their top risk is up 46% on the previous year. Economic uncertainty is up 31% on the year before while rising prices and an unpredictable economic environment are driving instability and civil unrest, the report notes.

US business must confront the double threat of unpredictability at home from rising gun violence, whilst as a world superpower it is facing up to a watershed in geopolitics as its relationship with Russia and China shifts, it states.

Finally, business leaders need to better understand their geopolitical risks and prepare for and seek to mitigate them where possible. Specialist political risk, trade credit and terrorism insurers have a role to play in providing appropriate cover that provides the risk mitigation that they need.

Roddy Barnett (pictured),  Beazley’s Head of Political Risks & Trade Credit commented: “Against a challenging backdrop, business strategies are now at a point of inflection. Even those territories far removed from the theatre of war in Eastern Europe are feeling the impact of global sanctions and commodity shortages on risks across the board from supply chain to cyber to political risk and trade credit.

“Businesses need to know that as we face a moment of geopolitical change, which is fraught with unpredictability, they can protect overseas physical assets and their human capital both at home and abroad, by actively investing in a mixture of risk management and effective insurance cover.”

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