Defusing the impact of geopolitical tensions

March 1, 2023

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Over the past year, countries around the world have dealt with wars, coming out of a global pandemic, a legacy of Brexit, and fuel and food security threats.

These factors have and will continue to affect risk — causing shocks on global supply chains and everyday life. Significant shifts in the geopolitical landscape, which are by design man made and therefore unpredictable — like soaring inflation and cost of power — require a truly holistic response. The risks levers driving these changes are connected and therefore any response must be integrated.

A challenge for risk managers running global, international or local insurance programmes is what to insure under their risk transfer, what to absorb within retention and risk capacity/appetite, and who to partner with to deliver that connected response needed. From their lens, the dilemma is whether to increase risk appetite and look at a captive or high-deductible solution or go for a more outsourced model that allows certainty on price and delivery.

For insurers, it is about how to price, how to revisit and strengthen wordings, creating new covers, the degree of green energy vs traditional underwriting. For service providers, it’s about how to balance people and technology, and be a true partner at the table to shape responses. Unfortunately, it is not possible to mitigate or prevent every risk — especially with increasing uncertainty — which is why more than ever, a strong insurance response is needed.

Risk transfer

Several coverages exist which can help provide assurance and should be considered as part of managing global claims programmes by the risk management team. These vary from political risk and violence to terrorism, credit risk and contingency. Cyber cover, for instance, is also critical in the age of cyber warfare and attacks as weapons of disruption. This requires strong incident response, 24/7 capacity and an ecosystem of partners to manage various components — from reputation to restoration.

Having the right coverage and level of deductible is a strong place to start, but it goes beyond that. Working with the broker and insurer, forward thinking and future proofing claims processes from the point of claim and considering how a loss will be managed by the adjuster/expert can take your plan a few steps further. For example, it’s vital to work with partners who have global coverage and can access desired locations or leverage artificial intelligence (AI) for greater automation when appropriate. It’s also beneficial for your partner to utilize remote technology like satellites/drones to augment processes, and have the technical expertise to navigate specialist claims.

To achieve these goals requires collaboration across the value chain, regular stakeholder discussions and robust programme management controls. Trainings and joint learning, which is often done after a weather catastrophe, is a good way to build confidence that if the worse happens, the response is ready. The nature of geopolitical claims is such that the stakes are very high, so there is a need to invest time to get the model and process right in advance of going live on a programme.


Behind the global challenges is an ongoing threat: lack of mitigation of climate change. There have been almost apocalyptic events around the world — from floods to fires and earthquakes increasing in unpredictability and ferocity, as well as record temperatures and droughts, creating fires on a scale never seen before. Civil unrest is an additional factor to consider. For insurers and partners, these concerns represent an opportunity to further embed their environmental, social and governance (ESG) agendas, help create smart cities, adapt more United Nations based principles for sustainable insurance, and use positive lessons learned during COVID to drive greater sustainability and business resilience.


Crisis does however breed innovation, and the insurance sector has the unique ability to come up with solutions by focusing on building more cost-effective claims responses. This may mean using more remote tools, adopting further digital agendas, unlocking the power of data to drive deep insights and value, looking at parametric solutions, and countering the Great Resignation by building long-term talent strategies. Ultimately, it’s a combination of the people, technology and processes across partnerships that can collaborate and ensure the risk manager looking at a complex global portfolio has the right coverages, business continuity plan, data security and service providers.

New problems will continue to emerge because of chaotic geopolitical events and from volatile financial markets, but rest assured we’re with you every step of the way.

Tags: Business continuity, Claims, Data security, empowering performance, Geopolitical tensions, Innovation, Performance, resilience, Resiliency, Risk, Risk management, Risk managers, risks, Supply chain, Supply chain disruptions, Technology