Rising geopolitical tensions and protectionist trade policies are increasing the risk of supply chain failures for organisations in 2025, according to a new report from Marsh.
According to the brokerage’s Political Risk Report 2025, which highlights key global political and economic trends affecting multinationals and investors, organisations trading with so-called connector countries, such as Vietnam, Mexico, South Korea and Hungary, may face heightened disruption due to evolving trade controls.
Governments could impose trade barriers on goods from these nations, particularly where components originate from previously sanctioned countries, contributing to increased global supply chain instability.
“Thus, as companies develop solutions to restructure their supply chains and increase resilience, leaders should recognise that using connectors will not always represent true diversification,” the report said.
Marsh also emphasised the energy transition’s political and market complexities, reflecting findings from the World Economic Forum’s Global Risks Report 2025, which identified environmental risks as a key long-term concern.
According to the report, while carbon credit markets made progress at COP29 and debt-for-nature swaps continue to gain traction, both face challenges related to political risk and potential non-delivery. Other political risks associated with certain carbon credit projects, including confiscation or forced abandonment, may also affect investments in the market, the report added.
To mitigate supply chain risks arising from geopolitical shifts, Marsh advised organisations to assess China’s trade strategy and review US trade policy objectives in order to evaluate the sustainability of the connector model within their business operations.
“A key question for business leaders wanting to improve their understanding of how trade flows may evolve is whether the current connector model will be sustained or if greater fragmentation between geopolitical blocs is likely to develop,” the report said.
Meanwhile, for organisations obligated to purchase carbon credits, Marsh advised considering insurance tools to mitigate and transfer risk, providing them with greater confidence that exposures will be better managed.
“To navigate compliance obligations and uncertainties surrounding the implementation and permanence of these regulations, organisations may benefit from adopting robust monitoring capabilities and developing an awareness of evolving political sentiments,” the report said.
Increased risks around the economy, geopolitics and the changing climate are creating an “incredibly complex operating environment” for organisations that have not been experienced in decades, according to Robert Perry, global political risks and structured credit leader at Marsh Specialty. However, those that are able to understand these risks and are able to find ways to mitigate them will likely be “better positioned” in identifying opportunities in the market, Perry added.
