Whats geopolitical risk?
Geopolitical risk can be defined as the risk of one country’s foreign policy unduly influencing or upsetting domestic political and social stability in another country or region. In isolation, geopolitical risk rarely rates consideration by investors. One reason for this is that prior to the terrorist attacks on the United States in September 2001, and the resultant launch of Washington’s “war on terror”, global geopolitical risk was almost non-existent. The Cold War greatly limited adventurous foreign policy by any one country. The collapse of the Soviet Union and the end of the Cold War left the US as the world’s sole superpower – power used to advance Washington’s global economic agenda rather than to stake political claims in another country or region. With geopolitical instability mostly limited to individual countries during the six decades between the end of World War II and the beginning of the “war on terror”, investors rightly focused on domestic issues to evaluate investment
