Recent events continue to show us that the destruction of human life from geopolitical events can sometimes render their impact on financial markets trivial in comparison. But we have a responsibility to consider the investment implications, prepare for and monitor them.
We know that geopolitical risks, and the great uncertainty that can stem from them, are one of the biggest financial concerns that keep our clients awake at night. Earlier in June we published an update to our report Peace of Mind in a Dangerous World to reflect the changes and increase in geopolitical risks since we first published this report in 2023. One of the main risks we’ve been monitoring, military confrontation between Israel and Iran, has since escalated, and we hope this report will shed some reassuring light on our approach to helping protect your investments from these risks.
It’s not possible to monitor every conceivable geopolitical risk. As investors, we’ve pinpointed four ‘Tier 1’ risks, including a direct military confrontation between Israel and Iran which leads to a serious disruption in global energy supply. The other three are a China-Taiwan crisis, an escalation of the Ukraine conflict and a highly disruptive cyberattack. We identify the ‘red flags’ that would suggest that each of these key risks might be imminent and outline how we plan to respond via adjustments to our investment portfolios.
If anything, the world seems to have become more dangerous in recent years and the future more unpredictable. But there are things we can do to prepare for the unknown.
We hope that, through explaining our robust approach to identifying, monitoring and responding to geopolitical risks, we can help you have peace of mind about your investments in these uncertain times.
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