Rising competition for land, sea and space is set to drive new geopolitical tensions over the coming years, according to a report from insurance broker Marsh.
The company's Political Risk Report 2022 warns that nations will increasingly seek to stake their claims on sea-based borders, previously untapped mineral resources, and the “all-but-unregulated cosmos”.
This is predicted to have a growing influence on interstate relations amid competition for food, raw materials and space-related intelligence gathering, navigation, and military communications.
“The conflict between Russia and Ukraine is a stark reminder of how quickly geopolitical risks can escalate and have a terrible local humanitarian impact as well as affect businesses and investors around the world,” said Nick Robson, head of credit specialties at Marsh Specialty.
“However, this is also a moment for businesses and investors to consider how developments in the environments of sea, space, and soil could influence future geopolitical tensions between countries and regions.”
With more than 80% of the sea depths unexplored, the report highlights how “blue exploration” could trigger broader environmental challenges given that managing climate risk is significantly dependent on care of the oceans.
Most potential resources are located in exclusive economic zones (EEZs), which cover territorial rights offshore that may be contested, especially where they overlap.
Demand and competition for strategic minerals such as cobalt, copper, lithium, manganese, thorium, titanium, uranium, and vanadium – which are also crucial to the energy transition and tackling climate change – are forecast to further shape future geopolitical risk.
Moreover, the growth in the space economy, when combined with the increased militarisation of space, could risk an escalation of tensions, according to the report.
Within the next decade, the low Earth orbit could host 100,000 satellites, leading to an increase in orbital debris. The impact of even a small piece of space junk could seriously damage orbiting equipment and risk triggering conflict.
Robson added: “Understanding these challenges and building them in to risk and insurance planning will make business more resilient, and help to secure growth, even as we adapt to our changed geopolitical realities.”
Image credit: iStock
Author: Chris Seekings