Wall Street expands geopolitical risk units as tensions rise

Investors are expanding geopolitical risk work as global tensions jolt markets. In recent days, sharp swings followed U.S. warnings of tariffs on multiple countries unless Washington reached an agreement to take control of Greenland. Asset managers and corporate treasurers are seeking help in pricing risks from wars, trade actions and political shocks, Reuters reports.

Industry executives report a steady rise in demand since Russia’s 2022 invasion of Ukraine, with a further pickup after U.S. tariff proposals announced in 2025 and the latest U.S. action in Venezuela. The Greenland-linked tariff threat added urgency by showing how policy signals can quickly hit currencies, commodities and equities.

Mehill Marku, lead geopolitical analyst for PGIM Fixed Income, described geopolitics as a core input for portfolios. “Before 2022, geopolitics wasn’t necessarily an important function in portfolio investment terms; it was a good thing to have but not a ‘must have,’” he noted, pointing to a jump in client inquiries. “It’s the interconnectedness of all the crises that feels really challenging to many.”

Firms are adding in-house experts, commissioning independent research and running scenario exercises to prepare for tariffs, sanctions and energy supply shocks. “We have to develop a new muscle, almost,” remarked Rishi Kapoor, vice chairman and chief investment officer of Investcorp, during meetings in Davos. “Earlier on, the geopolitical backdrop was something that we kind of took for granted and just assumed that it was a stable backdrop.”

Banks have formalized the work. JPMorgan last year opened a Center for Geopolitics. Lazard Asset Management and Goldman Sachs launched geopolitical advisory units in 2022 and 2023, respectively. Consulting groups report more board and investment committee briefings as clients seek decision frameworks.

Competition among providers has intensified, though several firms contend demand still exceeds supply. Jens Larsen, who leads the geo-economics team at Eurasia Group in London, observed that the supply of advice may not be keeping up as challenges grow more multi-faceted.

For portfolio managers, the widening list of flashpoints is changing risk controls. Where economic data and central bank decisions once dominated, stress tests now include tariffs, sanctions, cyber threats and resource disputes, and exposures are being mapped across supply chains and asset classes.

Investors point to the Greenland tariff episode as a recent example of how fast policy shifts can ripple through markets. It caps several years of elevated tension since the Ukraine war, with repeated swings tied to tariff announcements, energy disruptions and political uncertainty across regions.

As GNcrypto covered previously, US stocks and cryptocurrencies rebounded after signs President Donald Trump was backing away from Greenland-linked tariff threats, while traders cited global bond selling as the main driver. Crypto sentiment stayed weak, with Fear & Greed Index at 20, or Extreme Fear.