The outcomes of many elections in 2024, particularly in India and Mexico, bode positively for the resilience of democratic governance in the face of rising populism and authoritarianism. But not so positively that 2025 will see fewer political crises. A pattern of coups and popular unrest since 2019, including in Bolivia and Bangladesh in 2024, shows that unconstitutional attempts to seize or retain power are one of the most important sources of instability and market disruption.

Countries undergoing political transitions are often vulnerable. But the most disruptive political crises are when long-standing regimes suddenly fall. These classic grey swans usually occur when multiple factors converge. Such factors typically include a regime losing political credibility, alongside some weakening of state repression, divisions in the ruling elite and acute hardships fueling discontent. In Russia and Iran several of these warning indicators are increasingly evident.

The strategic outlook we forecast may require a fundamental shift for many businesses in how they think about preparedness. Resilience strategies should go beyond preparing for isolated shocks to anticipating an almost constant tempo of disruption, and where high-impact risks are not only possible but increasingly probable.

Balancing strategic anticipation and awareness without becoming consumed by frequent near-term issues will be a key challenge. Rather than focusing on predicting specific outcomes, businesses must be adaptable, forward-looking and ready to act in the face of uncertainty.

Scenario analysis that takes into account trends and risk drivers – such as those outlined in Strategic Outlook 2025 – is one of the most effective ways of reducing uncertainty and finding a way forward. And it may help to determine which of the many grey swans flocking in the near distance need closer attention so as to diminish their power to surprise.

All of these geopolitical risk trends, coupled with more frequent severe climatic events, are likely to fuel global market volatility, impact inflation and interest rates, and increase commodity price pressures in 2025. These, in turn, heighten the chances of political crises in vulnerable countries. A key trend to watch in 2025 is foreign currency defaults, especially in African nations.

Perhaps one of the most important security trends affecting economic risks is that malign actors now recognise the markets' sensitivity to supply chain disruptions and exploit this vulnerability. Disruptions targeting critical maritime trade chokepoints and civil aviation will be key threats to watch in 2025 as conflicts escalate, persist or new ones break out.

Sabotage attacks on cargo flights in Europe in 2024 – probably by Russian agencies – demonstrate this growing threat. The same is true for Houthi attacks on Red Sea shipping, which are very likely to continue as long as the war in Gaza persists. Disruptions at critical chokepoints like the Hormuz and Taiwan Straits – both near geopolitical flashpoints – are grey swan risks that could turn into reality if a crisis in the South China Sea or a broader conflict involving Iran breaks out.

Efforts to de-risk supply chains from countries like Russia or China will also present challenges of reliance on fragile alternatives. The 2023 coups in Niger and Gabon show the vulnerability of supply chains for critical resources like uranium and manganese. And many key producers of rare earth elements (such as Myanmar), and other essential minerals like aluminium, are unstable countries in regions under growing Russian or Chinese influence.

The proliferation of weaponised technologies – namely, in artificial intelligence (AI), drones and nuclear – is another key driver making hitherto improbable high-impact risks more likely to occur in 2025. All lower the barriers for both states and non-state actors to access capabilities that would have previously been out of reach, increasing the likelihood and intensity of conflicts and crises.

Multilateral and bilateral safeguards, regulations and treaties to limit the proliferation of such technologies are either unravelling, or failing to materialise, or to deliver. The rapid advancement of AI in particular is already reshaping the global risk landscape, with innovations outpacing the ability of governments and institutions to regulate or even fully grasp its effects.

AI is likely to not only intensify existing threats in 2025, but generate new ones. It already is enabling new forms of destabilisation: deepfake technologies that undermine elections, AI-powered cyberattacks that cripple critical infrastructure and advanced surveillance tools that reinforce autocratic control. Similarly, drones are enabling more actors to have outsized impacts and extend the boundaries of conflict zones by striking targets at longer distances with greater payloads.

It is nuclear weapons, though, that may prove the most immediate major driver of geopolitical risks and anxieties. China is expanding its nuclear arsenal and North Korea looks likely to renew nuclear tests. Russian threats to use tactical nuclear weapons will probably resurface should it incur significant setbacks in its war in Ukraine. The most urgent risk, though, is Iran accelerating its nuclear programme due to tensions with Israel, leading to another major military escalation risk in 2025.

Rather, it appears to prefer letting the West bear the costs of maintaining stability and finding solutions to complex issues that affect the global commons. Bringing an end to attacks on shipping in the Red Sea is one such example where China could contribute more but arguably benefits from the disruption.

Amid these issues, a key trend to watch in 2025 is the growing assertiveness of middleweight powers. Democracies like Brazil, India, Indonesia and Mexico are likely to push for reforms in multilateral institutions to better serve their interests. However, some authoritarian states are playing a less constructive role through bilateral actions. Egypt, Russia, Turkey and the UAE, for example, have been meddling in regional conflicts to pursue narrow self-interests, prolonging instability.

Countries such as Afghanistan, Burkina Faso, Libya, Mali, Somalia, Sudan and Syria are conflict zones where middle powers are involved, yet effective mediation or roadmaps to greater security remain absent. These regions are becoming safe havens for extremism, which are likely to fuel the revival of terrorist networks in 2025 that threaten regional and global security.

US-China competition will remain central to global risk trends, drawing smaller powers into contests over influence, resources and technology. East and Southeast Asia, where many states are inclined to hedge relations, are likely to remain the epicentres of this competition. But regional shifts toward protectionism and a need for security guarantees, as China asserts territorial claims and faces an economic crisis, suggest alignments in 2025 should favour the US, provided Trump can upend expectations about US commitment to regional partners.

At a global level, despite being the dominant military and economic power, the US will find its ability to reduce conflicts is limited in 2025. This challenge is even greater for European states, whose lack of unity and coherence, and hence diplomatic influence, further weakens their capacity to address the numerous crises worldwide. Increased Western military spending has not translated into more credible deterrence, which has been undermined by concerns about escalation with Russia, failures to enforce red lines and inconsistency in upholding international law.

The waning efficacy and relevance of institutions like the UN also contributes to the more frequent emergence and longer duration of crises. Economic sanctions are becoming less effective as states bypass them by forging new trade relationships outside the Western-led rules-based order. The rise of alternative financial systems centred on China is also likely to further undermine Western dominance and diplomatic leverage globally.

Compounding these challenges is that China wields its economic and military power to advance much narrower self-interests. It is unlikely to play a leadership role in reducing conflict risks in 2025.

Competition with China is likely to remain the top US strategic priority, with rising tensions the most likely result. Trump's administration will probably intensify trade sanctions and impose tariffs. His selective and transactional commitment to allies may also embolden China to accelerate its efforts to bring Taiwan under Beijing’s political control. The possibility of a crisis over Taiwan is a prolific grey swan. Beijing's intent to control Taiwan is clear, but how and when much less so, and Trump’s unpredictability may even act as a deterrent.

Direct conflict between China and the US seems unlikely in 2025. But China’s rapid military expansion and the scale of its military drills against Taiwan suggest it is racing to give itself options and the US pause for intervening. Beijing testing the Trump administration's commitment to its allies in 2025 with military exercises at invasion force scale in the South China Sea would be unsurprising, and would probably prompt a short crisis. This would most likely take the form of a weeks-long naval standoff in the area, accompanied by major military and naval exercises as well as punitive economic sanctions.

Trump’s ‘America First’ policy is also likely to reinforce perceptions of US indifference among partners in other regions, especially if he proceeds with tariff increases and foreign aid cuts. Countries in Africa, Asia and Latin America may shift further towards the Chinese and Russian orbit if Trump weakens US partnerships and downplays foreign assistance. This would result in the long-term erosion of US influence in these regions, weakening its ability to compete in a global order of shifting alignments.

The 2024 US election marked an inflection point with Donald Trump’s return to office, injecting new uncertainties into the global order. While domestic issues will almost certainly be Trump’s priority, he faces a long list of geostrategic issues he cannot fully retrench from. Trump’s inclination for unilateral deals may achieve some rapid diplomatic ‘wins’, but these will come with significant long-term risks.

Trump’s scepticism towards alliances like NATO, multilateral institutions and international treaty commitments suggests a return to a more isolationist ‘America First’ policy that prioritises domestic issues over global leadership. His unpredictable and transactional style, combined with scepticism towards traditional US multilateral commitments, means allies in Europe and Asia are bracing for an era of reduced American engagement.

The new administration’s most immediate foreign policy challenge is the war in Ukraine. Trump has promised a swift resolution, implying reduced US military aid and pressure on Ukraine to concede territory. Such a stance would meet opposition in the US, where public opinion is firmly against Putin. It would also unsettle European allies, who lack the resources to make up fully for reduced American support.

While a quick end to the Ukraine war aligns with Trump’s goal of reducing US entanglements, it risks emboldening Russia, weakening long-term European security and eroding US credibility as a defence partner. This raises the prospect that Trump may find there are too many political obstacles to imposing a peace deal on Ukraine, making a prolonged conflict favouring Russia in 2025 more probable than a swift resolution.

In the Middle East, Trump will probably return to a maximum pressure policy against Tehran. His close ties with Israeli Prime Minister Netanyahu suggest a sustainable peace in Gaza will become even more elusive. This could also embolden Netanyahu to accelerate unlawful settlements in Palestinian territory and take further military actions against Iran and its proxies, sustaining the risk of broader conflict that could draw in the US. However, Trump’s ties with Saudi Arabia and interest in normalising Israel-Gulf relations may prove a counter-balance, as it would require him to persuade Israel to end its conflict in Gaza.