Geopolitical risk dashboard

On October 8, Israel and Hamas agreed to a multi-phase peace plan negotiated by the U.S. and later endorsed by the UN Security Council. Initial steps, including hostage and prisoner exchanges and the pullback of Israeli forces outside major Palestinian population centers, have largely held. We think a lasting settlement that fully disarms Hamas and stabilizes Gaza will be difficult to achieve. The regional balance has shifted with the fall of the Assad regime in Syria, Israel’s degradation – but not elimination – of Iran-backed proxies such as Hezbollah in Lebanon and Iran’s diminished ability to defend itself following its 12-day war with Israel in June. Risks of renewed escalation remain elevated as Iran and its proxies seek to reconstitute, and as Israel continues military operations action against them. The Gulf is consolidating political and economic influence, and U.S. ties are deepening, including September security guarantees to Qatar and November defense and technology agreements with Saudi Arabia.

AI is at the center of U.S.-China strategic competition, with its enabling physical infrastructure increasingly treated as a national security asset. The U.S. administration is seeking to turbocharge AI development and the global diffusion of U.S. technologies. It is pursuing advances in artificial general intelligence by scaling compute capacity and building more powerful foundational models, while China focuses on widespread adoption through downstream technologies like robotics, drones and electric vehicles (EVs). The U.S. administration continues to promote the diffusion of U.S. AI technology globally, including to Gulf countries and to China. President Trump approved the sale of NVIDIA's H200 chips to China, siding with advisors who favor expanding market share for U.S. AI companies despite national security objections. While this sets positive conditions for further talks with Beijing during 2026, we think China will maintain its strategic focus on self-reliance and building out an indigenous Chinese AI ecosystem.

Mounting geopolitical competition is fueling a surge in cyber attacks that are growing in scope, scale and sophistication. Around the world, new AI technologies are enabling criminal actors to identify vulnerable targets, craft convincing scams and generate malicious code at unprecedented speed. In November, AI firm Anthropic reported uncovering an AI-enabled cyber espionage campaign in which state-backed hackers used its systems to target more than 30 companies and foreign governments, with AI automating up to 90% of the operation. The proliferation of new AI models has also raised concerns over their vulnerability to hacking and manipulation, prompting alarm in national security circles. State-backed hacking remains a significant risk, increasingly focused on political espionage, infecting critical infrastructure with malware and large-scale theft of intellectual property.

The threat of terrorism against U.S. interests remains at an extraordinarily high level. U.S. officials have described the November shooting of two National Guard members as an act of terror and U.S. agencies continue to highlight the persistent motivation by extremist groups to conduct or inspire attacks abroad. We also see risks stemming from sustained instability in the Middle East and across Africa, where jihadist groups have advanced towards the capital cities of Mali and Somalia, raising the threat of broader political control. Closer to the U.S., the U.S. administration has intensified its focus on Latin American drug cartels designated as terrorist organizations. Since September, the U.S. has carried out military strikes on vessels it alleged to be carrying cartel members. In November, it designated Cartel de Soles, a group it claims to be headed by Venezuelan President Nicolás Maduro, as a Foreign Terrorist Organization. This could pave the way for broader U.S. action against Venezuela after months of regional military buildup.

Since imposing historically high tariffs on over 90 countries in August, the U.S. administration has continued to pursue an aggressive approach to trade policy through new deals and pledges of inbound investment into the U.S. We think the period of peak disruption may have passed as the administration has rolled out exemptions and carve-outs for certain countries, companies and sectors, including food and agricultural goods. Ongoing Section 232 investigations could still result in additional sector-specific tariffs, we think. On November 5, the U.S. Supreme Court heard oral arguments in a case testing the administration’s ability to impose global “reciprocal” tariffs under emergency authorities, with a decision expected by early 2026. If those tariffs are struck down, we expect the administration to rely on alternative authorities to reconstitute much of its tariff program. Despite a temporary trade truce with China (see U.S.-China strategic competition risk below), we expect rolling negotiations, agreements and disputes to be the new normal in trade.

On October 30, President Trump and President Xi met in South Korea for the first time since 2019. Both countries agreed to a one-year trade truce under which the U.S. will reduce tariffs on select Chinese goods and China will delay the implementation of a broad rare earth export control regime, among other measures. The leaders also agreed to hold an April summit in Beijing and additional meetings in 2026, which we think will encourage both countries to avoid renewed disruption in the near term. Even so, competition with China remains at the core of nearly every major U.S. policy, and both countries have demonstrated their willingness to use strategic dependencies in areas such as rare earths and advanced technology. In the military sphere, the U.S. national security team remains focused on countering China in the Indo-Pacific. We think regional tensions will remain structurally high, with Sino-Japanese tensions spiking following November comments by Japan’s new Prime Minister Sanae Takaichi on Taiwan and an aggressive and adverse response from Beijing.

Russia’s invasion of Ukraine remains the largest and most dangerous military conflict in Europe since World War Two. Negotiations – including U.S. engagement aimed at a peace plan, security guarantees and post-war reconstruction – have intensified, but Russian escalations and maximalist demands may continue to challenge a durable settlement. In the meantime, the war of attrition continues, and the conflict has escalated. Ukraine continues to face large-scale Russian drone and missile attacks on urban areas and energy infrastructure and has retaliated with sustained strikes on Russian energy export facilities and military targets, including its first use of U.S.-supplied long-range missiles in November. Russia continues to test European resolve through ongoing grey-zone operations, to which European governments have signaled plans for a stronger response.

A wave of youth-led protest movements has swept across several emerging markets in recent months, including Bulgaria, Morocco, Kenya, Indonesia, Peru, the Philippines, Nepal and Madagascar. These movements have produced varied outcomes, from the resignation of Nepal’s prime minister following army-mediated negotiations to the forced exile of Madagascar’s president after a military-backed takeover. In the Philippines, protests persist over corruption allegations linked to flood-control projects that have generated billions in potential losses and already led to the resignation of two cabinet ministers. Despite differing contexts, the share common drivers, including cost-of-living pressures, youth unemployment and governance grievances. We are watching for further unrest ahead of a fresh cycle of global elections slated for 2026.

North Korea has taken a series of escalatory actions that heighten risks in and beyond the Asia-Pacific, including renouncing peaceful reunification with South Korea, accelerating its nuclear weapons program and deploying troops and munitions to support Russia’s war in Ukraine. In October, North Korea fired multiple short-range ballistic missiles and conducted hypersonic weapons, its first launches since May and the first since South Korean President Lee Jae Myung took office in June. President Trump has reiterated his desire to reengage North Korean leader Kim Jong Un through personal diplomacy, most recently during his October trip to Asia. President Lee has encouraged this approach, reflecting his own interest in easing tensions with Pyongyang. Compared with President Trump’s first term, however, Pyongyang appears emboldened by its stronger ties with Russia and China, as well as its own military advances, and may be less inclined to pursue better relations with the U.S.

We’ve seen a reset of the U.S.-Europe relationship since the start of the second Trump administration, outlined starkly in the Administration’s National Security Strategy. European governments, focused on pursuing "strategic autonomy,” have announced ambitious defense spending and economic reform agendas, drawing in part on the Draghi report on EU competitiveness to guide policy. We think delivery risks remain high amid fiscal, industrial and bureaucratic constraints. Political dynamics have also shifted, with headline risks no longer about outright rejection of the European project but rather about growing political paralysis within EU member states. Populist parties – now more broadly anti-incumbent than anti-EU – have narrowed governing majorities and reduced policy flexibility. Their rise reflects disillusionment with mainstream coalitions and erodes the consensus needed for large-scale reforms. This new cycle of constrained policymaking – compounded by a fragile governing majority in France and a narrow coalition in Germany – could limit Europe’s ability to address its security and competitiveness challenges heading into 2026.