Geopolitical risk analysis is the attempt to quantify internal and external risks to the state by assessing the local, regional and global security framework. A range of interdependent factors affect political and strategic stability including local and transnational actors, economic and political geography, regional geopolitics, and complex social and cultural forces. Lebanese political stability for example, is as much dependent on its unique social and political composition, influenced by a divisive physical geography, as it is by the influence of outside powers, such as Saudi Arabia and Iran.
Political factors include the degree of democratic representation and popular support, character of political competition, government effectiveness, the record of political transitions and political violence. The security environment depends on factors such as internal and external conflict, the strategic role and role of foreign powers, terrorism, ethnic or religious tensions, levels of civil unrest, crime and kidnapping. Political, human, and economic geography forms the backdrop to this type of risk analysis. In the tradition of classical geopolitics, even physical geography has a measurable political impact .
Geopolitical risk occurs at multiple levels, including at the global, country, and operational level. Global-level risk refers to those processes which affect multiple countries, or events that have global implications. A conflict in the Persian Gulf leading to the blocking of the Straits of Hormuz would be felt worldwide as international crude oil prices presumably soar. Country-level risk refers to challenges affecting a particular country, typically related to issues such as political instability or conflict. Operational-level risks are industry-specific challenges that organizations face; the crucial role of community politics in Shell operations in the Niger Delta, for example.
Global-level risks have been on the increase in recent years owing to an increase in the ambition and reach of both state and non-state actors. Great power competition, as well as the assertiveness of regional powers, has become more visible amid the rise of a multi-polar world and the unraveling of the post-Cold War order of hegemonic stability which pundits called the Pax Americana. The relative US share of global power, expressed in economic and strategic terms, has been steadily declining amid the growth of emerging powers, particularity in East Asia. Political history suggests that as rising powers challenge the stability of an international system, the risk of interstate conflict increases. This occurs as a rising power pursues its national interests, challenging other power’s with established claims, or shaping the overall rules of the game if it powerful enough.
A persistent idea views globalized economic integration as a restraining factor on harmful state competition: countries plugged into, and benefiting by the global trading system are prone to limiting their strategic behavior in the interests of both short- and long-term economic gain, the theory holds. These paradigms are at best unreliable, and at worst harmful insofar as the economic deterministic approach creates a flawed model of strategic behavior.
Conflict is driven by various factors, including political ambitions, economic motives, and ideological imperatives. The actors include states, parties within states, and transnational non-attendance actors. Increasing nationalism in recent years increases conflict risks through discriminatory politics, and the propensity towards military adventurism as means of directing and consolidating domestic politics.
Multi-polarity, specifically the rise of powerful regional actors mean the world is undergoing an incremental yet consistent revision of political relationships. Rising powers are altering the form and substance of world order through revising political and strategic norms and values. The annexation of Crime from Ukraine by Russia in 2014 was a clear challenge to the prevailing rules of territorial sovereignty, and the limitation of military aggression as an instrument of national policy. The US invasion of Iraq in 2003 was equally destructive insofar as it was based on false pretexts and essentially illegal under international law.
The decline of US power relative to the rise of other major powers, mainly in Eurasia, is resulting in increasing instability as regional powers take active steps to shape their respective geopolitical environments. Russia’s annexation of Crimea and proxy wars in Ukraine, China’s island building activities in the South China Sea, on territory illegally claimed, as well as the expansion of Iranian influence throughout the Middle East since 2003 are examples. Regional hegemons inevitably develop overlapping spheres of interest and influence with other regional, as well as extra-regional powers, increasing the risks of miscalculation and conflict, increasing geopolitical risk. These rivalries also impact the domestic politics of weak states caught in-between competing spheres of influence. Instability generated by regional and extra-regional powers is especially apparent in eastern Europe, the Middle East and North Africa, South and East Asia. Sub Saharan Africa remains highly unstable, due in part to domestic tensions aggravated by weak and ineffective governments.
The danger of strategic competition is that rivalries play out in the domestic politics of targeted states. This has the capacity to encourage and aggravate factionalism among elites, undermine political cohesion, and reduce effective governance, increasing the risk of policy paralysis or at worst, state failure. Lebanon in 2017, caught between Saudi Arabia and Iran, runs the risk of government destabilization, or at worst civil war if competing internal factions once again take up arms. Syria is an example of a politically motivated uprising turned civil war, where the interests and active support of various regional and extra-regional powers have contributed greatly to the extent and duration of the conflict.
Proxy warfare will likely be the weapon of choice between the great and regional powers, as it was during the Cold War. Nuclear weapons will continue to act as a restraint on conventional hot wars between great powers; however, brief skirmishes between these states, such as naval confrontations in the South China Sea, or a clash in the Baltic’s, are not unthinkable.
It is noteworthy that no great power war has broken out since the second world war; this has been attributed to the stabilizing bipolar Cold War order where nuclear weapons, in the words of Martin van Creveld, “cut the link between victory and survival”. The post-Cold War era, described as ‘unipolar’ due to US strategic preponderance, saw a continuation of restraint on the part of the great powers and lower levels of interstate war; however, civil war, insurgency, asymmetrical warfare, political violence and state collapse will remain distinct challenges in the years ahead.