A spotlight on geopolitics
While geopolitics has long been a significant risk for global businesses, the landscape has become more turbulent in 2025, prompting organizations to demand greater support from their insurance partners. While multinational companies are keeping track of dozens of trends, here are three areas of particular focus.
01 The U.S.-China influence
Despite an agreement to scale back some recently announced tariffs, the strategic and economic competition between the U.S. and China remains intense. This rivalry spans trade, technology, and regulatory domains, creating a complex landscape for multinational companies.
Global businesses must contend with:
Technology decoupling
Both nations are accelerating efforts to reduce reliance on each other’s technology ecosystems. In response to China’s tightening data privacy laws, many global firms are now segregating their Chinese data infrastructure from global systems to comply with local regulations.
Regulatory shifts
China’s regulatory environment has evolved rapidly, particularly in areas like cybersecurity, antitrust, and environmental compliance. For instance, new rules targeting per- and polyfluoroalkyl substances (PFAS) reflect growing domestic pressure to address public health and environmental risks.
Supply chain questions
Ongoing tensions over Taiwan, export controls on semiconductors, and restrictions on outbound investment continue to fuel uncertainty for global supply chains and capital flows.
Monetary policy
In the U.S., the Fed continues to hold interest rates steady, while China is easing rates to support slowing growth. This divergence complicates capital flows and creates currency and liquidity challenges for multinational companies.
02 “Hyperlocalization”
As global regulatory environments grow more complex — particularly in China, the Middle East, and Latin America — multinational companies are increasingly considering whether more independent local operations can help insulate them from potential impacts.
At the same time, geopolitical tensions — especially between the U.S. and China — and supply chain vulnerabilities are prompting companies to diversify manufacturing and sourcing. Many are shifting operations to Southeast Asia, Latin America, and Central and Eastern Europe, aiming to reduce overreliance on any single country and build more agile, regionally distributed supply chains.
While granting more autonomy to local business may take time, the effect on risk management strategies may be quicker. Because of the rapid pace at which global regulations are changing, legacy global programs may not be nimble enough to respond to organizations’ local needs. As a result, companies may pursue stand-alone local coverages that can offer more nuanced solutions.
As local entities explore alternative coverage solutions separate from what their parent organizations have historically purchased, challenging legacy global program structures that companies have relied on for decades, risk management teams will require greater engagement from their broker and carrier partners. This involves designing and executing stand-alone, locally compliant risk management programs while also providing local support to navigate evolving compulsory coverage requirements, as well as local tax, anti-money laundering, and “know your client” documentation.
03 Volatile emerging markets
Doing business in a number of emerging markets — particularly in Latin America and Africa — is becoming more difficult amid an uptick in various political and economic risks. Political instability and exchange rate volatility are on the rise, forcing companies to reevaluate the safety and security of in-country employees and infrastructure, and their ability to repatriate revenue.
To respond to this changing global landscape and ensure they have appropriate coverage for their global operations, companies are more frequently exploring forms of insurance that historically have been less frequently purchased. For example, businesses are evaluating whether coverage for strikes, riots, civil commotion, war, and terrorism should be addressed through property insurance policies or within separate political violence policies, which typically offer more robust coverage for specific exposures.
Continued volatility in exchange rates — driven by political instability, inflation, and external economic pressures — can significantly erode premium values and inflate claims costs in foreign-denominated policies. This creates financial gaps for insurers and additional burdens for companies while also triggering complex tax implications for multinationals.
To maintain stability across emerging markets, effective currency risk management and localized underwriting strategies are essential. Carefully structured currency conversion clauses can play a pivotal role in mitigating these exposures.
These developments highlight the need for multinational companies to work with experienced global risk advisors with a deep understanding of the global landscape and its rapidly changing norms and regulatory requirements. The right insurance broker can connect insureds with resources from around the world to navigate these risks and support them in devising strategies and risk management programs that best respond in an optimal and compliant manner.
Monitoring the conflict in the Middle East
Following recent escalations across the Middle East, multinational organizations with risks in the region can anticipate greater underwriting scrutiny from carriers, requiring more stringent underwriting analysis and the need for more detailed exposure questionnaires. Even those without direct exposures in the region may be impacted by insurers adjusting their overall approach to international coverages and ratings.
As the situation continues to evolve, organizations operating in the Middle East should consider reviewing key coverages, resources, and exposures that could be impacted. These include, but are not limited to:
- First-party property.
- Cyber.
- Marine cargo, given concerns about potential disruptions to shipping traffic through the Strait of Hormuz.
- Business travel accident, personal accident, and any other travel/employee injury-related cover.
- Foreign voluntary workers’ compensation, including any travel assistance services/emergency evacuation services embedded within existing policies or purchased separately.
- Political violence or terrorism coverage.
Among other things, policyholders should review any war exclusions across all applicable lines of coverage, as well as evacuation triggers for coverage. Amid global conflicts and a rapidly changing geopolitical landscape, Lockton’s Global Solutions team is working closely with our risk, product, and industry specialists around the world, providing organizations with strategic guidance to best navigate growing global risks.
