The Impact of Geopolitics on Long-Term Risk

Geopolitical developments are increasingly shaping the long-term risk landscape for the global economy and financial institutions. This presentation explores how shifting global power dynamics are challenging the foundations of economic stability and global interconnectedness. Regional conflicts, such as the escalating tensions in the Middle East, combined with broader systemic rivalries among major powers, are raising critical concerns for global trade, energy security, and financial markets.

In particular, the session highlights the strategic competition between geopolitical blocs such as the G7 and BRICS—over trade, market influence, technology and critical rare materials. These trends underscore the emergence of a multipolar world order, in which geopolitical fragmentation creates new and unpredictable risk vectors.

By linking these developments to macroeconomic stress scenarios, the presentation offers a framework for incorporating geopolitical risk into long-term financial decision-making. Through historical perspective, current analysis, and scenario-based tools, it equips actuaries and risk professionals with practical approaches to strengthen resilience in an era of global uncertainty.

The presentation also explores how to improve the construction and use of scenarios, drawing inspiration from Superforecasting and Radical Uncertainty. It emphasizes the behavioural aspects of decision-making under uncertainty—such as cognitive biases, overconfidence, and the human tendency to rely too heavily on single-point forecasts.