The era of assuming a stable geopolitical backdrop is officially over.
According to new industry reports, demand for specialized geopolitical analysis is surging as asset managers and C-suites scramble to price in “multi-faceted” risks—from US-Greenland tariff threats to the intervention in Venezuela. What was once a niche overlay is becoming the primary driver of capital allocation.
📉 THE SHIFT (Nice-to-Have → Must-Have):
- The Old World: Investors focused on economic data points and Central Bank policy.
- The New Reality: Mehill Marku (PGIM Fixed Income) notes that before 2022, geopolitics was secondary. Now, the interconnectedness of crises (Ukraine, Trade Wars, Sanctions) is the top client concern.
- The Quote: “We have to develop a new muscle… My base case is worst case,” says Pandu Patria Sjahrir, CIO of Indonesia’s sovereign wealth fund Danantara, highlighting how underwriting standards have shifted to extreme caution.
🏛️ INSTITUTIONAL RESPONSE: Wall Street and consultancies are ramping up capacity to meet this “insatiable” demand:
- Banks: JPMorgan, Goldman Sachs, and Lazard have all recently launched or expanded dedicated geopolitical advisory divisions.
- Consultancies: Firms like Signum Global Advisors and BCA report surging client interest. Signum’s upcoming investor trip to Venezuela is already oversubscribed (60 clients fighting for 20 spots), proving that investors are desperate for on-the-ground clarity in volatile regions.
🔮 THE DRIVER: Marc Gilbert (BCG Center for Geopolitics) notes that US policy volatility has catapulted geopolitics from a “top 20” concern to the #1 priority for boards. The velocity of trade threats means corporate strategy can be upended overnight by a single executive order.
💡 ANALYST TAKEAWAY: The “Venezuela Trip” anecdote tells the whole story. Investors aren’t shying away from geopolitical chaos; they are trying to figure out how to trade it. The supply of quality advice is struggling to keep up with demand because the risks are no longer binary—they are structural. As Rishi Kapoor (Investcorp) put it at Davos: we can no longer take stability for granted.
👇 Risk Managers: Is your investment committee effectively weighing political tail risks, or is it still treating them as “unmodelable” externalities?