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A leading risk management firm, Control Risks, has identified the top five risks that businesses are likely to face in 2025, accompanied by recommendations on how organizations can prepare for and respond to these challenges.
According to their report, these risks include domestic and foreign policy uncertainties stemming from the incoming Trump administration, a global trade war between the United States and China, increasing political violence, widespread cyberattacks on digital infrastructure, and heightened geopolitical tensions involving key global players.
Claudine Fry, a partner at Control Risks, highlighted the overarching factors driving these risks in a video summary of the report: “In 2025, global risks to business will be driven by power vacuums and polarization, conflict and political violence, and the double-edged sword of technological advancement.”
U.S. Policy Shifts and Global Power Decline
The report predicts that under President Donald Trump, the United States will continue to see a decline in its global influence. This anticipated retreat includes withdrawing troops and scaling back on long-standing security commitments, leaving both allies and adversaries uncertain. Businesses will face an increasingly complex investment climate due to rapid changes in U.S. regulations.
The report also suggests a divergence between U.S. and European interests in areas like sanctions, supply chain regulations, and environmental, social, and governance (ESG) initiatives. Control Risks advises businesses to fight “for a seat at the table to ensure their interests are heard.”
Trade War Fallout
Control Risks projects that national security will become a central principle of international trade and investment in 2025. A trade war between the United States and China is expected to exacerbate global supply chain bottlenecks, despite a potential overall increase in trade.
“As trade tensions ramp up in 2025, companies will need to make supply chains more resilient to geopolitics,” the report warns. Businesses are encouraged to anticipate scenarios that might jeopardize critical supplier or customer relationships. At the same time, new opportunities could emerge through subsidies, tax incentives, and exemptions from tariffs and export controls.
Rising Political Violence
Political violence is expected to present “diverse and more unpredictable threats” in 2025. The report identifies several key drivers, including a resurgence of Islamist extremism, state-sponsored attacks on political opponents abroad, right-wing extremism, and lone-actor violence.
“Companies must be aware of the risk of sudden destabilization of the political environment, and for the potential of individual acts of political violence to trigger broader social unrest,” the report states. The potential for abrupt deteriorations in bilateral relationships could lead to regulatory and reputational risks for businesses.
Cyberattacks on Digital Infrastructure
Another significant risk in 2025 is the vulnerability of centralized technological ecosystems to cyberattacks. Control Risks points to an incident where a Microsoft system crash, caused by a software update from cybersecurity vendor CrowdStrike, resulted in $5.2 billion in damages. This event exposed critical weaknesses in digital concentration.
The report cautions about the potential for a “deliberate, malicious attack in 2025” on global technological systems by nation-states or other malicious actors. Such an attack “could be catastrophic,” it warns, urging companies to brace for potential global system failures. “Agility and resilience will define those that manage their impact, versus those that suffer continuous operational downtime throughout the years to come.”
Geopolitical Tensions and Red Lines
The report highlights geopolitical flashpoints as another area of concern. It predicts potential consequences from "red lines" being crossed, including Russian actions in Ukraine, Israel’s involvement in the Middle East, and China’s stance on Taiwan. Businesses are advised to prepare for rapid changes in regional and global stability and to incorporate stress-tested operations into their enterprise risk management plans.
“Companies should ensure they are scanning the geopolitical horizon for other red lines and Rubicons that could trigger significant changes in the risk landscape,” the report advises.
The Road Ahead
As businesses navigate these anticipated challenges, Control Risks emphasizes the importance of adaptability and robust planning. By proactively addressing these risks, organizations can position themselves to withstand the turbulence of 2025.
By fLEXI tEAM