Growing Demand for Geopolitical Analysis Among Investors Amid Rising Risks

The Rising Importance of Geopolitical Analysis

By Suzanne McGee and Divya Chowdhury

Impact of Recent Geopolitical Events

RHODE ISLAND/DAVOS, Jan 23 (Reuters) - Demand for geopolitical analysis is rising, as asset managers and corporate investors seek guidance on the best way to price in risk from wars, territorial saber-rattling and global political risk.

Consultancy Firms Respond to Demand

The need for such advice was highlighted this week when the U.S. threatened various countries with tariffs unless a deal was reached over the U.S. taking control over Greenland, causing a rollercoaster reaction in markets.

Investor Strategies and Insights

Other geopolitical events that have roiled markets include Russia's 2022 invasion of Ukraine, U.S. President Donald Trump's 2025 call for broad tariffs and subsequent negotiations with individual countries, and this month's U.S. intervention in Venezuela. 

For investors, geopolitical risk used to be overshadowed by factors including economic data points and central bank decisions. But since the Ukraine war, the demand for insight has been climbing steadily, said Mehill Marku, lead geopolitical analyst for PGIM Fixed Income.

"Before 2022, geopolitics wasn't necessarily an important function in portfolio investment terms; it was a good thing to have but not a 'must have'," Marku said, adding the number of client calls had spiked. "It's the interconnectedness of all the crises that feels really challenging to many."

Investors and consultancy firms say the rising need for geopolitical advice and analysis has prompted them to either ramp up their own in-house capabilities, seek more independent analysis or increase the advice to give clients. Such analysis can include written reports, more tailored advice or developing scenario analyses.  

"We have to develop a new muscle, almost," Rishi Kapoor, vice chairman and chief investment officer of Investcorp, the Middle East's biggest alternative investment firm, told the Reuters Global Markets Forum on the sidelines of the World Economic Forum in Davos.

"Earlier on, the geopolitical backdrop was something that we kind of took for granted and just assumed that it was a stable backdrop."   

Pandu Patria Sjahrir, CIO of Indonesia's sovereign wealth fund Danantara, said his fund now did a lot of work on political leaders' risk.

"This year, maybe even more so than any other year, we're focusing a lot more on geopolitical risks," he said. "We think about worst case now in terms of underwriting. In fact, my base case is worst case."

The second Trump administration's policies have helped catapult geopolitics to the top spot on the list of client priorities, from being "somewhere in the top 20" about a decade ago, said Marc Gilbert, head of the BCG Center for Geopolitics.

Everything is "faster, harder, more volatile" he said of U.S. trade and foreign policy pronouncements. In the last 18 months, he has had 235 meetings with C-suite officers and corporate board members on these topics, which he said marked a dramatic increase.

Asked for comment on increasing demand for geopolitical analysis, White House spokesman Kush Desai said the president's "shakeup of this broken status quo is finally putting America First" and that "trillions in investments pouring into the United States is proof" that investors believe it is the most dynamic global economy. 

CONSULTANCY FIRMS GRASP OPPORTUNITY 

Banks have been dedicating resources to the theme. JPMorgan last year launched a dedicated Center for Geopolitics, while Lazard Asset Management and Goldman Sachs launched geopolitical advisory divisions in 2022 and 2023 respectively.

JPMorgan did not return requests for comment on the center. Goldman and Lazard did not respond to requests for comment.  

Heightened awareness of global risk is increasing the need for specialist geopolitical analysis firms, said Matt Gertken, chief geopolitical analyst at investment consulting firm BCA, who said his company was growing, without giving specifics. 

Consulting firm Signum Global Advisors has also seen increased demand, boosting its roster of partners by 25% last year as its client list grew, said Charles Myers, the firm's chairman and founder.  

There was particular interest from investors trying to understand what may result from the shifting power dynamics in Venezuela, said Myers, adding that he had 20 spots for an investor trip to the country on March 23, but 60 clients eager to participate, and was considering making the trip a full-fledged investor conference at a Caracas hotel.

Jens Larsen, London-based head of Eurasia Group's geo-economics team, said competition to provide geopolitical insights was growing. 

"I’m still not sure that the supply of advice is keeping up with demand as the nature of the challenges becomes multi-faceted," said Larsen. 

(Suzanne McGee in New York & Divya Chowdhury in Davos, Switzerland; editing by Megan Davies and Nia Williams)