Geopolitical Risk

Geopolitical risk means the risk that political conflict, war, sanctions, or tensions between countries will affect markets or the economy. In simple terms, geopolitical risk is the uncertainty caused by world events and international conflict. Geopolitical risk is important because it can affect oil prices, trade, currencies, investor confidence, and supply chains. When geopolitical risk rises, investors may become more cautious and move toward safer assets. For example, a conflict in an oil-producing region can increase geopolitical risk and push energy prices higher. Geopolitical risk is not the same as normal market risk. It comes from political and international events rather than only company earnings, interest rates, or economic data.