Geopolitical Risk: From Awareness To Action

Companies cannot overlook geopolitical risk any longer. Trade disputes, cyber threats, energy insecurity, and heightened geopolitical fragmentation are increasingly shaping financial markets and the real economy.

Why it matters now?

For financial institutions, geopolitical risk can manifest across multiple risk categories:

• Market risk: increased volatility, repricing of assets, and shifts in capital flows.
• Credit risk: pressure on sectors exposed to geopolitical disruption.
• Liquidity and funding risk: stress in cross-border flows or counterparties.
• Operational risk: cyberattacks, supply chain vulnerabilities, or sanction regimes.

Understanding these exposures — and anticipating how they might evolve — is critical for informed decision-making and regulatory alignment.

At Probability & Partners, we assist financial institutions in incorporating geopolitical risk into their risk management frameworks. We work with clients to develop scenario-based approaches to assess and mitigate these risks.