Day: September 8, 2025

From food, electronics and critical medical supplies to automobiles, oil and gas, the global economy depends on a resilient supply chain. Yet, threats that impede or even interrupt the flow of goods and materials are multiplying. The era of exponential risk is changing how organizations and governments view and manage geopolitical risks.

As tensions continue to escalate in key regions of the world, trade routes are becoming more and more dangerous. Conflicts arising from territorial disputes, ideological differences and regional power struggles have the ability to transcend borders and impact neighbouring economies as well. Escalating tensions can disrupt cross-border investments and capital flows, foreign exchange rates, financial stability and impose heightened economic uncertainty. These negative effects are especially pronounced in border and neighbour countries, where they can have profound impacts on sovereign risk.

With so much of the world’s economy dependent on globalization, business leaders are more and more concerned about the growing impact of geopolitical risks. Whether it’s an increase in sanctions, regulatory changes or political unrest, geopolitical instability can lead to lower revenue opportunities and higher compliance costs for companies operating across geographies.

And when conflict escalates, it can cause severe supply chain disruption. For example, if an invasion of a country in the Middle East impacted oil production and led to price spikes, this would affect businesses that depend on refined fuels, like airlines and manufacturers of cars or electronics. Other industries would also be affected, depending on the availability of rare and strategic minerals. For instance, a lack of these materials could impact semiconductors and automotive technology, while food shortages would threaten the health and well-being of people in vulnerable states.

Military coup is the sudden overthrow of a government by the armed forces. A successful coup usually requires a small group of officers to control all or part of the armed forces, police, and other security elements of the state. Coups rarely alter a nation’s fundamental social and economic policies, or redistribute power between competing political groups. Rather, they replace one leader with another and may briefly shift the balance of power in favor of the military or other powerful interest groups.

A recent putsch in Myanmar, for example, exemplifies this pattern. After an election that gave Aung San Suu Kyi’s party a supermajority in parliament, the ruling military junta froze democracy and expanded its own powers. The army’s impulsive actions reveal that its leaders have an insatiable appetite for more power.

While many fear that praetorian politics is making a comeback, the 2021 putsch in Tunisia and the similar ones in Mali, Burkina Faso, and Niger are more evidence of military leaders’ deep frustration with their own inability to govern effectively than an awakening nostalgia for old dictatorships. The recent putches also point to a crisis in democratic norms that are being rapidly eroded.

Much of the latest research pinpoints factors—such as coup proofing or “political legacy effects”—that reduce the likelihood of a military takeover. But these findings may be misleadingly simple: Most coups are not caused by any particular factor; instead, they are the result of a combination of multiple factors. A new generation of scholars needs to develop complementary methods that will allow us to understand more fully why and when a military coup occurs.