Business leaders face a “more volatile and riskier” year amid geopolitical and macroeconomic trends that will “reshape structures of international politics, trade and finance”, according to Marsh Specialty’s annual Political Risk Report.

The report says this is the “biggest election year in history”, with 40% of the world’s population expected to vote in more than 60 elections, including in the US, India and various European countries.  

These elections, at risk of weaponised misinformation and civil unrest, “are likely to affect international relationships and drive policy uncertainty, disrupting markets as a result”.  

Marsh notes the “tricky balance of domestic politics and international debt obligations”, with many emerging countries with high debt to GDP ratios expected to have difficulty repaying. It says a failure to balance repayment obligations will prolong unrest, political violence and risk.  

Unsustainable debt burdens in advanced economies will also be an issue, with the US, Italy and Japan given as examples. The report says these burdens may discourage further subsidy implementation and restrict trading.  

“As organisations make decisions for the future, they need to consider how long-term uncertainty caused by geoeconomic competition and geopolitical insecurity may also be influenced by current events,” Marsh said.  

The report also highlights clashes between market forces and the international consensus on energy transition, worsening climate events and rising food and water insecurity as areas of concern.  

Marsh says organisations must identify and prepare for upcoming risks with appropriate mitigation plans that consider all potential knock-on effects.  

“In a time of such uncertainty, where the range of possible scenarios and structural outcomes seems to grow ever broader, businesses that understand, accept, manage and transfer the risks inherent in the changing macroeconomic and geopolitical environment will be well positioned to pursue growth opportunities that emerge during this period of transition,” the report said.  

Click here to access the full report.