By Chinonyerem Emmanuel
As wars intensify, trade tensions flare and political shocks ripple across borders, investors are increasingly turning to geopolitical analysis as a core part of their decision-making toolkit, rather than a peripheral consideration.
Asset managers, corporate investors and advisory firms say demand for insight into global political risk has surged, driven by a world that feels more volatile, interconnected and unpredictable than at any point in recent decades.
That need was underscored this week when U.S. threats to impose tariffs on multiple countries unless a deal was reached involving American control over Greenland sent markets on a sharp rollercoaster ride.
The episode highlighted how quickly political rhetoric and diplomatic brinkmanship can translate into market turbulence, forcing investors to reassess risk in real time.
Geopolitical shocks have increasingly dominated headlines and balance sheets alike.
Russia’s 2022 invasion of Ukraine reshaped global energy markets and supply chains. U.S. President Donald Trump’s renewed push for sweeping tariffs in 2025, followed by country-by-country negotiations, injected fresh uncertainty into global trade.
More recently, Washington’s intervention in Venezuela added another layer of complexity to an already fragile geopolitical landscape.
For years, investors largely focused on traditional drivers such as inflation data, interest rates and central bank policy.
But since the Ukraine war, geopolitics has moved from the margins to the center of portfolio strategy, according to Mehill Marku, lead geopolitical analyst at PGIM Fixed Income.
He said client demand for geopolitical insight has climbed steadily as crises increasingly overlap and reinforce one another.
“Before 2022, geopolitics wasn’t necessarily a must-have in portfolio investment terms,” Marku said. “Now it’s the interconnectedness of all these crises that feels especially challenging for investors.” He added that calls from clients seeking guidance have spiked as they try to understand how political risk feeds into asset pricing.
In response, investors and advisory firms are rapidly building new capabilities. Many are expanding in-house geopolitical teams, commissioning independent analysis or asking consultants to develop detailed scenario planning to stress-test portfolios against worst-case outcomes.
The goal is no longer just to react to events, but to anticipate how political decisions, conflicts or leadership changes might cascade through markets.
“We have to develop a new muscle,” said Rishi Kapoor, vice chairman and chief investment officer at Investcorp, the Middle East’s largest alternative investment firm, speaking at the Reuters Global Markets Forum on the sidelines of the World Economic Forum in Davos.
“In the past, we more or less assumed a stable geopolitical backdrop. That assumption no longer holds.”
The shift is also evident among sovereign investors. Pandu Patria Sjahrir, chief investment officer of Indonesia’s sovereign wealth fund Danantara, said his team now devotes significant resources to assessing political leadership risk.
“This year, maybe more than any other, we’re focusing heavily on geopolitical risks,” he said. “We think about worst-case scenarios when underwriting. In fact, my base case is now worst case.”
According to Marc Gilbert, head of the Boston Consulting Group’s Center for Geopolitics, policies under the second Trump administration have propelled geopolitics from a minor concern to the top of client priority lists.
“Everything is faster, harder and more volatile,” he said, referring to U.S. trade and foreign policy moves. Gilbert noted that he has held more than 230 meetings with corporate executives and board members over the past 18 months to discuss geopolitical risk—a dramatic increase from previous years.
Banks and asset managers are also seizing the opportunity. JPMorgan launched a dedicated Center for Geopolitics last year, while Lazard Asset Management and Goldman Sachs rolled out geopolitical advisory units in 2022 and 2023.
Consulting firms specializing in political risk say demand is outpacing supply as clients seek more nuanced and actionable insights.
Matt Gertken, chief geopolitical analyst at BCA Research, said heightened awareness of global risk is driving growth in specialist firms like his. Signum Global Advisors has expanded rapidly as well, boosting its number of partners by a quarter last year, according to founder Charles Myers.
He said investors are particularly eager to understand shifting power dynamics in countries such as Venezuela, noting overwhelming interest in a planned investor trip there later this year.
Even as competition among geopolitical advisory firms intensifies, experts warn that the volume and complexity of global challenges may still exceed the industry’s capacity to analyze them fully.
“I’m not sure supply is keeping up with demand,” said Jens Larsen, head of geo-economics at Eurasia Group, “especially as these risks become more multi-layered and interlinked.”
For investors navigating today’s markets, geopolitics is no longer background noise.
It has become a central variable one that can move markets overnight and reshape long-term strategies just as profoundly as interest rates or economic growth.
Source Reuters
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