February 2026
Executive Summary for 3-5 Minute Review
| Risk | Current Exposure | Trigger Threshold |
|---|---|---|
| 1. Iran Escalation Cascade | US military buildup in Persian Gulf concurrent with internal Iranian instability creates dual escalation pathways. Strait of Hormuz flows (20m b/d) and 1.5m b/d of Iranian exports directly exposed. Insurance costs and shipping disruptions materialise before any kinetic event. | Any strike on Iranian territory or credible threat to Hormuz shipping lanes. Liquidity-critical for energy-exposed portfolios. |
| 2. Technology Decoupling Acceleration | US-China export control ceasefire is fragile. China's military-civil fusion strategy now makes it "increasingly difficult to identify which parts of China's supply chain are safe to engage with." Middle powers face forced alignment choices. | Resumption of semiconductor export restrictions or rare earth counter-measures. Capital-relevant for technology and manufacturing exposure. |
| 3. Sanctions Enforcement Weaponisation | Washington pairing tariff authority with sanctions enforcement signals more forceful approach to shaping global energy behaviour. 79% of organisations now view geopolitics and trade policy as a threat. Secondary sanctions risk extends to third-party procurement networks. | Secondary sanctions on Russia oil purchasers or expanded enforcement against Chinese intermediaries. Earnings-material for supply chain operations. |
| Opportunity | Strategic Rationale |
|---|---|
| Strategic Intermediary Positioning | Multipolar competition creates opportunities for agile, neutral actors. UAE model demonstrates deliberate bets on intermediary value. Organisations with geographic and relationship optionality can capture arbitrage from fragmentation. |
| Critical Minerals Supply Chain Repositioning | China's dominance of critical mineral supply chain presents "unsustainable strategic vulnerability" for Western economies. Iran regime change scenario could unlock sanctions relief and reshape trade flows, with European, Indian and Japanese entities positioned to benefit. |
| Priority Issue | Current Posture | Leadership Attention | Posture Change Trigger |
|---|---|---|---|
| Iran Escalation | Active Monitoring | Energy hedge review; supply chain insurance assessment may warrant CFO attention | Direct military engagement or Hormuz shipping incident |
| Technology Decoupling | Active Management | Vendor and supplier exposure mapping; Board discussion on China-linked partnerships could be considered | New export controls or rare earth restrictions |
| Sanctions Enforcement | Monitoring | Compliance architecture stress-testing; executive judgement on third-party network exposure | Secondary sanctions on current trading partners |
The geopolitical operating environment has shifted from episodic tension management to structural fragmentation. Three developments now dominate the leadership agenda:
First, geo-economic confrontation has become the primary state tool. The weaponisation of tariffs, sanctions, and supply chains is no longer exceptional policy but default statecraft. Washington's willingness to pair tariff authority with sanctions enforcement signals a more forceful approach to shaping global economic behaviour, with immediate implications for energy-import dependent economies and cross-border operations. Seventy-nine percent of organisations now cite geopolitics and trade policy as their primary threat vector.
Second, the technology decoupling window is narrowing. China's military-civil fusion strategy has reached a threshold where identifying "safe" engagement points in Chinese supply chains has become structurally problematic. The US-China export control ceasefire remains fragile, and any resumption of restrictions would cascade across semiconductors, AI, and critical minerals within weeks. Middle powers are being forced into alignment choices that may prove irreversible.
Third, regional flashpoint density has increased without corresponding escalation management capacity. Iran, Taiwan, and Ukraine each present distinct escalation pathways, but the interconnection between them through energy markets, supply chains, and alliance commitments means that a shock in one theatre propagates rapidly. The expiration of New START has left global nuclear stability in uncharted territory, with no replacement framework in sight.
The shift from a rules-based order to multipolar competition is no longer prospective: 68% of expert respondents now expect a fragmented global order within the decade. This creates a fundamentally different risk calculus. Organisations built for stable interdependence face structural disadvantage. Those with geographic optionality, relationship flexibility, and supply chain redundancy gain asymmetric advantage.
Energy security has returned as a first-order strategic concern. Any material escalation involving Iran puts 1.5m b/d of exports at immediate risk and raises concerns over the 20m b/d flowing through Hormuz. Even short-term disruption would tighten effective supply through insurance costs and shipping rerouting before any production is actually lost.
American unilateralism may be making China appear a more reliable partner. Multiple sources indicate that aggressive US trade and security demands are creating opportunities for Beijing to position itself as the more consistent and predictable counterparty in key relationships. Indonesia's resistance to US tariff-for-policy demands and ASEAN hedging behaviour suggest the alignment assumptions underlying many Western strategies may be weakening faster than anticipated.
The One Thing That Matters: Economic interdependence has become a vulnerability to be exploited rather than a stabilising force.
Why This Is Changing Now:
Supporting Signals:
Strategic Implication: Organisations must treat supply chain geography as a strategic variable, not an operational detail. The cost of maintaining China-linked procurement networks now includes explicit sanctions escalation risk. Decide: Acceptable exposure thresholds for third-party network risk.
The One Thing That Matters: The multipolar order is no longer emerging; it has arrived, and it lacks the institutional architecture to manage competition.
Why This Is Changing Now:
Supporting Signals:
Strategic Implication: Alliance assumptions require stress-testing. Organisations with operations dependent on stable US-allied frameworks must evaluate exposure to alignment shifts in key middle-power jurisdictions. Prepare: Scenario planning for fragmented regional rule-sets.
The One Thing That Matters: Multiple escalation pathways are now active simultaneously, with energy markets as the primary transmission mechanism.
Why This Is Changing Now:
Supporting Signals:
Strategic Implication: Energy price assumptions must incorporate correlated escalation scenarios. Current hedging strategies may underweight the probability of simultaneous disruption across multiple theatres. Monitor: Insurance cost movements as leading indicator of institutional risk repricing.
The One Thing That Matters: The boundary between civilian technology engagement and military exposure in China has effectively collapsed.
Why This Is Changing Now:
Supporting Signals:
Strategic Implication: Technology partnerships with Chinese entities now carry explicit dual-use risk that must be evaluated at board level. The compliance burden has shifted from transaction screening to structural relationship assessment. Decide: Which existing partnerships require immediate review.
Scenarios describe operating environments we may need to live in and adapt to, not discrete shock events. These scenarios are used to stress-test decisions already under consideration, not to generate new ones.
Critical Uncertainties:
Scenario A: Managed FrictionManaged Competition + Localised Tensions US-China trade truce holds with periodic renegotiation. Regional flashpoints flare but remain contained through deterrence and diplomatic channels. Energy markets experience volatility within manageable bands. Middle powers maintain hedging strategies without forced alignment. Global supply chains adapt incrementally rather than restructure fundamentally. Investment flows continue with elevated but stable risk premiums. Core Dynamic: Friction is monetised rather than resolved. Positioning: Moderate instability, high coordination Early Indicators:
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Scenario B: Cascading FractureActive Decoupling + Multi-Theatre Escalation Technology decoupling accelerates as export controls resume and China retaliates with rare earth restrictions. Iran escalation triggers Hormuz disruption concurrent with Taiwan Strait incident. Energy prices spike above $120, triggering inflation resurgence and risk-off sentiment across emerging markets. Alliance systems fracture as middle powers choose sides under duress. Supply chains face simultaneous disruption across multiple critical inputs. Core Dynamic: Correlation of risks overwhelms hedging capacity. Positioning: High instability, low coordination Early Indicators:
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Scenario C: Selective DecouplingActive Decoupling + Localised Tensions US-China technology separation proceeds methodically while regional conflicts remain contained. Two parallel technology ecosystems emerge with limited interoperability. Organisations face binary choices on technology partnerships but have time to restructure. Energy markets remain stable as Middle East tensions are managed diplomatically. Europe pursues tech sovereignty while maintaining trade relationships with both blocs. Supply chain restructuring is costly but orderly. Core Dynamic: Strategic separation without kinetic conflict. Positioning: Moderate instability, moderate fragmentation Early Indicators:
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Scenario D: Pragmatic MultipolarityManaged Competition + Multi-Theatre Escalation Regional conflicts escalate but US-China economic interdependence creates shared incentive for containment. Great powers cooperate on crisis management while competing on influence. Middle powers gain leverage as both blocs seek alignment. Energy disruptions are offset by coordinated strategic reserve releases. New multilateral frameworks emerge to manage specific issues without comprehensive architecture. Organisations benefit from optionality as multiple relationships remain viable. Core Dynamic: Competition and cooperation coexist by necessity. Positioning: High instability, moderate coordination Early Indicators:
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The following opportunities are ordered by degree of strategic asymmetry: the extent to which disruption creates advantages unavailable to competitors without equivalent positioning, capabilities, or risk tolerance.
Opportunity Description: Multipolar competition creates premium value for entities that can operate across bloc boundaries without forced alignment. The UAE model demonstrates that deliberate positioning as a neutral intermediary in financial systems and strategic investments generates influence disproportionate to economic scale. Organisations with established relationships across US, China, and non-aligned jurisdictions can capture arbitrage from fragmentation through trade facilitation, dispute resolution, and capital intermediation services.
Required Capabilities: Multi-jurisdictional compliance architecture; relationship capital in both US and Chinese regulatory ecosystems; geographic presence in key neutral hubs (Singapore, UAE, Switzerland); demonstrated track record of navigating sanctions regimes without enforcement action.
Classification: Material new growth line
Time-to-Market: Now (for organisations with existing positioning); 6-12 months (for capability build-out)
Opportunity Description: China's dominance of critical mineral supply chains presents an "unsustainable strategic vulnerability" that Western governments are actively seeking to address. Organisations positioned to accelerate alternative supply development in Australia, Africa, or Latin America can capture both commercial returns and strategic partnership value. Iran regime change scenario would additionally unlock sanctions relief and reshape trade flows, with European, Indian, and Japanese entities positioned to benefit while Chinese independents face stiffer competition.
Required Capabilities: Mining or processing expertise; project finance relationships; government affairs capability in target jurisdictions; ability to absorb elevated country risk during development phase.
Classification: Material new growth line
Time-to-Market: 6-12 months (for partnership structures); Optional/conditional (for greenfield development)
Opportunity Description: Great-power competition is driving new job opportunities in defence industries across South Korea, Turkey, Poland, and allied nations. The US National Defense Strategy prioritises technological modernisation and flexible force structures, while Congress must modernise acquisition frameworks to compete with China's military-civil fusion industrial base. Commercial entities with dual-use technology capabilities can capture defence procurement opportunities while adversaries face increasing restrictions on Western technology access.
Required Capabilities: Security clearance infrastructure; compliance with ITAR and equivalent regimes; engineering talent with defence sector experience; established relationships with allied defence ministries.
Classification: Portfolio optimisation (for existing defence-adjacent capabilities); Material new growth line (for new market entry)
Time-to-Market: 6-12 months (for contract pursuit); Optional/conditional (dependent on specific procurement cycles)
The following risks have been deliberately deprioritised based on current assessment of likelihood, timing, or existing mitigations. This section reflects analytical discipline, not blind spots.
1. Imminent Taiwan Military Invasion: While Taiwan Strait risk remains elevated and is appropriately monitored, a full-scale invasion within the 6-18 month planning horizon is assessed as unlikely. China's economic resilience issues persist, US deterrence remains relevant, and escalation risks are deemed too high by Beijing relative to available alternatives. The organisation's exposure is primarily through semiconductor supply chain concentration, which is addressed through existing diversification initiatives.
2. Complete Dollar Reserve Currency Displacement: De-dollarisation trends are real and warrant monitoring, but structural replacement of dollar dominance within the planning horizon is not credible. BRICS alternative payment mechanisms remain nascent, and the dollar's network effects in trade settlement and financial infrastructure create substantial switching costs. Gradual erosion is incorporated into long-term planning; rapid displacement is not.
3. European NATO Fracture: Despite US policy unpredictability and burden-sharing tensions, European commitment to collective defence has strengthened rather than weakened. The €90 billion Ukraine loan and new defence initiatives signal sustained investment in deterrence capability. Individual member state hedging does not constitute alliance dissolution risk within the planning horizon.
4. Global Pandemic-Scale Supply Chain Disruption: While regional disruptions remain possible and are factored into operational resilience planning, a pandemic-scale simultaneous global supply chain shutdown is not being treated as a base case scenario. Post-COVID inventory management practices and diversification investments provide adequate mitigation for localised disruption scenarios.