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Political Risk Isn’t Unmodelable. It’s Just a Lot Messier.
- Civil conflict and political instability
- "Gray zone" sabotage and infrastructure disruption
- Tariffs and export controls
- Sanctions and sovereign action
- Investor protections and forced-exit/cessation risk
Political risk used to be the kind of exposure you could keep at arm’s length, relevant for a few high-risk jurisdictions, or as a line item in a specialist insurance program. In 2026, that separation is breaking down.
The question for executives and investors is no longer whether politics matters, but whether the tools we use to measure it are still fit for purpose.
On this week’s Risky Science Podcast we spoke with Samuel Wilkin, a geopolitical risk expert at Willis Towers Watson (WTW), about why political risk is moving from a background concern to a front-line business problem and what risk managers should do when the world becomes harder to forecast.
WTW has long built probabilistic political risk modeling into its process. As Wilkin put it, “five years we’ve had this scenario’s capability built into our political risk modeling tools.” But the shift now is about how those models are being used: “more and more we’re leaning into these kind of gen AI tools,” he said, driven by emerging threats that are difficult to fit neatly into traditional frameworks.
One of the fastest-rising concerns Wilkin flags is the growth of “gray zone” attacks, operations that sit in the uncomfortable space between war and peace. “These gray zone attacks have been soaring,” he said, particularly for European companies and multinational investors with exposure in the region.
That matters because these risks don’t behave like conventional “cat-style” political risk triggers. They are hard to underwrite cleanly, hard to price, and often land first as second-order impacts: infrastructure disruption, logistics constraints, or cascading operational downtime.
Wilkin noted that GenAI has been useful for mapping how a company’s operations depend on critical systems—“electricity grids… ports… the infrastructure dependencies”—and stress-testing what happens “if these gray zone attacks shut something off… or there’s a disruption in flights.”
The conversation then turns to a broader structural question: what happens when the assumptions of global stability and investor protection stop being automatic?
Wilkin pointed to a line from WTW’s political risk survey: “Until last year, businesses and politics lived in two different realities and the events of the past year have aligned those realities.” Even if imperfect, the takeaway is clear: “We now have to take political realities into account in pretty much every business decision.”
In Wilkin’s view, the rules-based order is coming apart and is being replaced by this regime of seperate tariff deals. That creates a more fragmented, conditional environment for supply chains, investor rights, and strategic planning—and forces companies back to an old discipline that suddenly feels new again: scenarios.
Some scenarios are so extreme they feel unthinkable. But as Wilkin notes, companies may have to model them anyway because in 2026, even the unthinkable is no longer theoretical.
👉 Listen to the full episode
