New York | March 10, 2025
According to a new report released today by Marsh, the world’s leading insurance broker and risk advisor and a business of Marsh McLennan (NYSE: MMC), organisations are more at risk of acute supply chain failure in 2025 as a result of heightened global geopolitical tensions and protectionist trade strategies.
Marsh’s Political Risk Report 2025 outlines the major trends in the current global political and economic landscape that will impact multinationals and investors in the year ahead. As well as the risks associated with the reshaping of global trade and geopolitics, the report states that shifting market and political dynamics present both energy transition challenges and opportunities for organisations, especially in relation to carbon credit markets (CCMs) and debt-for-nature swaps (DFNSs).
According to the report, organisations that trade with connector countries – such as Vietnam, Mexico, South Korea, and Hungary – to circumvent existing or anticipated trade controls, or have suppliers doing the same, may be prone to greater trade policy-induced disruption in the months and years ahead. As a result of deteriorating relations between major trading partners, governments may also impose trade barriers on goods from connector countries – especially those that include components from the originally targeted country – which could create significant global supply chain volatility.
To improve their resilience to supply chain shocks stemming from the current geopolitical landscape, the report recommends that organisations review China’s commitment to its trade strategy and the US’s underlying trade policy objectives, and consider the extent to which the current connector model will be sustained, as it applies to their business models.
The Political Risk Report asserts that shifting market and political dynamics present both energy transition challenges and opportunities, echoing the findings of the World Economic Forum’s Global Risks Report 2025, in which environmental risks dominate the 10-year horizon. While global CCMs took a major step forward at COP29 and DFNSs have also gained traction, challenges remain in both CCMs and DFNSs regarding political risk and the potential for non-delivery. Further, increased climate compliance obligations, especially those originating from new European Union regulations, may present operational risk challenges for organisations.
Robert Perry, Global Political Risks & Structured Credit Leader, Marsh Specialty, said: “Heightened risks around the economy, geopolitics, and the changing climate are creating an incredibly complex operating environment unlike any other organisations have experienced in decades. Those that build on their ability to comprehend, assess, and mitigate the risks facing their operations will likely be better positioned to identify opportunities where others may only see ambiguity and gain a competitive edge in these uncertain times.”
