How Geopolitical Volatility will Impact Businesses| Aon Insights Series UK

May 31, 2024 3 mins

The Year of the Vote: How Geopolitical Volatility Will Impact Businesses

Companies that operate around the world need to have a global appreciation of the heightening geopolitical risk.

This year has widely been dubbed as the year of the election. Voters are set to hit the ballot box in over 70 countries over the course of 2024, including some of the most populous and powerful nations in the world. The results of these elections could have far-reaching knock-on effects, affecting foreign policy decisions and potentially disrupting the world order as we know it.

This is set against the backdrop of two conflicts that continue to dominate world affairs. First, there is the ongoing Russia-Ukraine war, where Ukraine is reliant on continuing military support from the West and NATO to defend itself. Although the US military aid package has finally been approved by Congress, Ukraine’s reliance on long-term military assistance combined with recent Russian advancements, means that a partitioned Ukraine is now a possibility. This would create challenges for the global economy, particularly through further disruptions to energy and food markets.

70+

countries in the world are scheduled to organise elections in 2024.

People always ask me when are things going back to normal. The answer is: this is normal.

Sir Alex Younger

Former Chief ("C") of the Secret Intelligence Service (MI6)

Second, the Israel-Hamas conflict in Gaza is causing global division with no obvious end in fighting or sign of peace in sight. While fighting was initially limited to Gaza, we have seen that this conflict can easily escalate. Businesses have already experienced disruptions to key trade routes due to the actions of the Houthis, but a wider Middle East conflict would have a deeper and more significant impact on global supply chains as well as affecting oil and gas prices.

Fallout from the COVID-19 pandemic, the effects of inflation and shifts in fiscal and monetary policy mean that there is a higher likelihood of civil unrest around the world. In the past few years, there have been riots and protests throughout Latin America as well as a series of military coups and civil wars in the Sahel and West Africa. Taking Africa as an example, 17 countries through the continent are scheduled to organise elections in 2024 which, when coupled with the economic challenges these nations are already facing, exacerbates the existing political instability and could well lead to greater civil unrest.

This is a year that holds a significant amount of geopolitical risk and volatility. The issues raised here are, by virtue of being global in nature, widely interconnected. Indeed, each of these risks could potentially impact or intensify the others. It is important that companies that operate around the world have a global appreciation of the heightening geopolitical risk, think strategically about how these risks might affect their operations and consider credible risk transfer mechanisms to mitigate these risks.