At a high level, geopolitical tensions involve power competition and national interests. They play out in international relations and can impose costs and disruptions on business. They also impact the global economy and supply chains and can complicate long-term strategy development. A deeper interpretation requires consideration of the interconnected nature of these dynamics, particularly as they intersect with the crucial domains of energy and sustainability.
The race for resources – both fossil fuels and critical minerals needed for renewable technologies and electric vehicles – is one of the most significant drivers of geopolitical tensions. The scarcity of these resources is driving nations to seek control over contested regions and to intervene in resource-rich countries. The pursuit of energy security is a primary goal for many nations, leading to military interventions and support for regimes with questionable human rights records.
In a world increasingly defined by trade disputes and retaliatory policies, economic geopolitical risk is a growing concern for businesses. For example, the ongoing trade conflict between the US and China is expected to slow economic growth and prompt companies to rethink supply chain strategies and invest in new production capacity. The resulting uncertainty about tariffs, trade agreements and regulatory compliance can disrupt international supply chains and increase the cost of operations. Moreover, the reshoring of production from China to reduce dependence on volatile international markets creates new operational risks. It may also lead to delays in planned expansions and lower profit margins as production costs rise.