Geopolitical risk and regulatory uncertainty are a daily reality for firms.
Russia’s invasion of Ukraine, conflict in the Middle East, trade rivalry between the US and China, and expanding sanctions regimes are all adding to increasing regulatory compliance burdens globally.
According to a Bank of England survey, financial institutions see geopolitical risk as one of the most frequently cited concerns.
The health of the geopolitical landscape directly impacts organisations. For example, politically motivated cyberattacks have been used to disrupt financial flows; these types of attacks have doubled in frequency since the COVID-19 pandemic.
As geopolitical risks rise and evolve, this often leads to tighter controls, enhanced due diligence measures and demanding reporting requirements.
Regulators around the world alter regulatory frameworks to strengthen financial safeguards and protect the economy from wrongdoing such as money laundering, financing of criminal activities and sanctions evasion.
Different jurisdictions react to country-level geopolitical risks through inconsistent frameworks, leading to regulatory divergence and further stress for compliance, risk and legal teams.
To solve challenges such as this, plus managing the ever-changing regulatory compliance landscape, the Financial Action Task Force recommends proactive risk management strategies that focus on future threats and reacting before it’s too late.
Tools such as horizon scanning are key to assessing risk appetites, resilience planning, stress testing and staying ahead of every regulatory change.
FinregE’s automated regulatory compliance and horizon scanning acts as an early warning system to help firms stay proactive against today’s changing geopolitical environment.
We empower firms to navigate upcoming risks before they harm the business by scanning for risks within news, publications, rulebooks and proposals.
What is geopolitical risk?
Geopolitical risk refers to the challenges that arise when political events or tensions disrupt the way countries, markets or supply chains operate.
These risks can stem from conflicts like wars, government sanctions, trade disputes or sudden changes in regulations, and they can have a ripple effect across the global economy.
A clear example is the Russia–Ukraine conflict, which has shaken multiple industries and influenced financial markets, particularly in Europe’s energy and security sectors. In times like these, investors often become more cautious because the landscape feels less predictable.
Another major example is the ongoing US–China trade rivalry. Their tensions have disrupted global supply chains and financial markets, with consequences felt by businesses and consumers around the world.
Types of geopolitical risks
Volatile markets: Political tensions or conflicts can quickly shake financial markets. Stock prices, bond yields and currency values may swing sharply, and in some cases, these disruptions can trigger broader market downturns.
Supply chain disruptions: When geopolitical issues escalate, global supply chains often feel the impact first. Businesses may face delays, higher costs or shortages as goods become harder to move across borders.
Regulatory change: Governments and regulators may respond to geopolitical events by imposing new rules such as sanctions, tariffs or other trade restrictions to protect their economies and manage risk. These changes can significantly affect how companies operate.
5 steps to feel more confident in an uncertain geopolitical landscape
- Treat geopolitical risk as a strategic input, not background noise
Instead of reacting to events as they happen, build geopolitical thinking into your long-term strategy. Map out possible scenarios, consider how they might affect your business, and prepare contingency plans. Being ready for multiple outcomes is one of the strongest forms of resilience. - Strengthen risk management with a clear assessment framework
Regularly review your operations through a geopolitical lens, whether using data, expert insights or both. Assess factors like political stability, energy security, regulatory shifts and wider economic conditions. These insights help businesses and investors anticipate potential threats and support smarter investment decisions. - Rethink your operating model if your exposure has changed
If your business has historically operated in one country but is now vulnerable to disrupted suppliers, shifting regulations or new political risks, it may be time to reconsider your footprint, partnerships or supply chain strategy. - Bolster compliance and due diligence
Use regulatory horizon scanning to stay ahead of sanctions, tariffs and policy changes. Strengthening your due diligence processes helps you flag issues early and adapt your risk strategy in real time, supporting faster, more informed decision-making. - Use regtech that adapts as fast as the world does
Modern regulatory technology can monitor changes 24/7 and alert you instantly when new risks emerge. Tools like FinregE help firms stay informed, compliant and ready to respond to geopolitical shifts. Regularly updating your assessments ensures your strategy stays robust, even as global conditions evolve.
Financial institutions need AI-powered risk intelligence solutions that can keep pace with a fast-changing world, tools that can interpret evolving regulations in real-time, identify geopolitical risks, and support compliance across multiple jurisdictions without slowing the business down.
How FinregE helps
The message is simple: regulatory compliance can’t be something you think about later, the stakes are far too high. By adopting smart, adaptive compliance technology, firms can stay ahead of regulatory change, respond quickly to emerging risks and operate with greater confidence, even in periods of uncertainty.
FinregE gives organisations the intelligence and agility they need to navigate complex regulatory environments and turn risk management into a strategic advantage. Book a demo today.
