Since 2016, there has been a steady increase in geopolitical risk at the system level due to the competition between the United States and China in various areas. However, the invasion of Ukraine by Russia caused a sudden spike in global geopolitical risk. As a result, western companies had to adjust to new sanctions and supply chain disruptions, leading to long-term investment considerations. To enhance supply chain resiliency, some companies are implementing “friend-shoring,” which involves containing production systems within allied nations. While the ongoing war of attrition is unlikely to escalate beyond Ukraine’s borders, the risks associated with an increasingly cornered Putin and its impact on the global economy are increasing as the fighting continues.
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