Geopolitical risk dashboard

In mid-June, Israel launched “Operation Rising Lion,” a broad military campaign targeting Iran’s nuclear program, missile infrastructure and military leadership. The U.S. joined the Israeli operation with unprecedented strikes against three Iranian nuclear sites. The 12-day war leaves Iran defenseless against air and missile attacks, on the back of Israeli actions against Iranian proxies and the fall of Iran’s ally in Syria. The war did not meaningfully disrupt the supply or transport of oil. Uncertainty around the extent of the damage and Iran's ability to rebuild raises concern about the durability of the ceasefire that took effect shortly after. Mutually incompatible red lines and distrust will hinder negotiations over the future of Iran’s nuclear program and narrow the path to a lasting settlement, in our view. In Gaza, there are signs of progress toward a new ceasefire between Israel and Hamas after an intensified Israeli campaign sparked concerns that Israel would move toward a prolonged occupation. In Lebanon, a tenuous ceasefire remains in place between Israel and Hezbollah.

In the wake of escalating trade actions and a series of competitive steps on export controls and advanced technology, U.S.-China relations are in a challenging position. The U.S. national security team holds hawkish views on China and is committed to countering China in the Indo-Pacific. Military tensions may be poised to escalate, especially in the event of an accident or miscalculation. In June, China conducted unprecedented maneuvers of its aircraft carrier strike group across the Pacific's first island chain – which includes Japan, Taiwan and part of the Philippines. The activity demonstrates China’s posture to deny U.S. access to the region in the event of a conflict. Meanwhile, political tensions between China and Taiwan are ticking up, as Taiwanese President Lai Ching-te recently made several public statements rejecting Chinese sovereignty. The nuclear area could present emerging risk, with recent reports suggesting China is increasing its nuclear arsenal faster than any other country.

AI is at the center of U.S.-China strategic competition and U.S.-China technology decoupling continues. The Trump administration has pursued an accelerationist approach to embed U.S. AI technology globally, while tightly controlling China's access to advanced hardware and infrastructure. In May, the administration rescinded the Biden-era AI Diffusion Rule – a global framework to determine who gets advanced chips and under what terms – but has not yet replaced it. Signs point to an approach that favors broad proliferation on a country-by-country basis to build a U.S.-led tech ecosystem that excludes China. The intersection between AI and geopolitics was on full display during Trump's trip to the Gulf in May, coinciding with deals to deliver tranches of advanced chips to the region annually, as well as a deal with the United Arab Emirates and G42 to build the largest AI campus outside the U.S., powered by American chips and largely serving American hyperscalers. These investments will make Gulf countries a significant player in the AI race.

Mounting geopolitical competition is causing cyber attacks to increase in scope, scale and sophistication. Around the world, new generative AI technology has expanded the efficacy, accessibility and impact of malicious hacking operations by state actors and cyber criminals alike. A proliferation of new AI models has also raised concerns over their vulnerability to hacking and manipulation, prompting alarm in national security circles. For this reason, we think AI and its associated hardware, data and tech clusters will increasingly be treated as national security assets. State-backed hacking remains a significant risk that is increasingly centered on political espionage, infecting critical infrastructure with malware and the industrial-scale theft of intellectual property. State-backed operations surged last year, with some critical industries seeing a 300% spike in targeted attacks, according to CrowdStrike’s 2025 Global Threat report. Iranian cyber operations may increase as Iran looks for asymmetric ways to retaliate.

The threat of terrorism against U.S. interests remains at an extraordinarily high level. Al-Qaida and the Islamic State have demonstrated persistent motivation to conduct and inspire attacks abroad in recent years. We see risks stemming from sustained instability in East and West Africa, the growing threat from the Islamic State following the Assad regime's collapse in Syria and individuals motivated by events abroad to attack the U.S. This risk is particularly acute as Iran may use terrorism as an asymmetric tool to respond to U.S. and Israeli actions to dismantle its nuclear and ballistic missile programs. The U.S. has warned its citizens at home and abroad of a heightened risk of violence resulting from the conflict.

Russia’s invasion of Ukraine is the largest, most dangerous military conflict in Europe since World War Two. U.S., Russian and Ukrainian delegations have held a series of direct talks since early 2025, but have failed to reach agreement over the terms and sequencing of a potential ceasefire. We think a definitive deal will prove hard to reach given the competing aims of Russia, Ukraine, the U.S. and the Europeans – and Putin’s continued commitment to Russian maximalist goals against Ukraine. The Kremlin continues its efforts to put Russian society and its economy on the war footing. Russian troops have begun a summer offensive campaign, conducting unprecedented drone and missile attacks. Ukraine's large-scale drone attack against Russian strategic bombers thousands of miles into Russia in June demonstrated Ukraine's resolve to stay in the fight, but did not shift the balance of the conflict in its favor.

As the world faces a new era of global trade tensions (see our Global trade protectionism risk), emerging market economies are poised to experience different outcomes based on their underlying economic structures and trade relationships. Export-dependent economies will face the greatest pressure, we think, with currency realignment likely serving as the primary adjustment mechanism, unless the currency is part of a trade deal. Some countries will likely reach deals with the U.S. to avoid snapback “reciprocal” tariffs after the U.S. pause expires on July 9, but others will be left in more challenging positions: Southeast Asian economies, for example, are caught between close ties to China, reliance on the U.S. market and high levels of exposure to U.S. sector-specific tariffs on areas like autos, steel, aluminum, semiconductors and pharmaceuticals – both imposed and likely to come. Latin America is better positioned. But markets in all regions will likely face a slower growth environment, with the World Bank having recently cut its growth forecasts in nearly 70% of all economies. China’s continued export of industrial overcapacity remains a particular concern for countries poised to receive additional Chinese trade flows diverted from the U.S.

North Korea has taken a series of escalatory actions that risk greater tension in and beyond the Asia Pacific region. These include renunciation of peaceful reunification with South Korea as a key policy goal and the deployment of munitions and troops to directly support Russia in its war against Ukraine. Meanwhile, North Korea’s nuclear program continues unabated. Trump has said he would reach out to Kim Jong Un and may seek to again moderate North Korea through personal diplomacy. The victory of center-left candidate Lee Jae-myung in South Korea’s presidential election in June may presage a shift toward "conditional diplomacy" with North Korea, breaking from the hawkish approach of the prior administration. Lee's decision to suspend loudspeaker broadcasts along the demilitarized zone was a deliberate signal towards de-escalation and dialogue. Compared with Trump’s first term, North Korea is emboldened by its stronger relationships with Russia and China as well as its own military advances. As a result, it may be less inclined to see better relations with the U.S. as a priority.

We’ve seen a fundamental reordering of the U.S.-Europe relationship since the start of the second Trump administration. In response, European governments are investing in "strategic autonomy" – pursuing an independent defense capability and an accelerated economic reform program. In May, the EU announced the creation of a shared defense fund, and in June European NATO members (except for Spain) agreed to increase defense spending to 5% of GDP by 2035. While these changes have boosted European unity in the short-term, the risk of longer-term breakdown of cohesion within the bloc and individual member states remains – particularly after a series of elections in 2024 and 2025. Elections in Romania and Poland were viewed as bellwethers for the strength of populist movements across Europe and forecast potential signs of divergence in the European bloc. In Romania, the centrist, pro-EU candidate won the presidential election in May, whereas in Poland, the right-wing, Euroskeptic candidate won the presidency in June by a narrow margin.