Irish Firms Face New Era of Geopolitical Risk as Global Tensions Reshape Business Landscape

For the first time in two decades, geopolitical volatility has emerged as a defining concern for Irish businesses, marking a profound shift in how companies must navigate an increasingly complex global environment.

According to Aon's latest Global Risk Management Survey, geopolitical tensions have surged 21 places to crack the top ten risks facing firms across Ireland, Europe, and beyond. This dramatic rise reflects the new reality facing Irish enterprises as they grapple with the ripple effects of international conflicts and shifting power dynamics.

Ireland's Strategic Position Offers Some Protection

"It's the first time in 20 years that this has even gotten into the top ten of risks that have been identified," explained Rachael Ingle, CEO of Aon Ireland. "Things have absolutely changed over the last period of time."

Irish executives ranked geopolitical volatility as their eighth highest concern, somewhat below the European average. This relatively lower ranking likely stems from Ireland's geographic distance from active conflict zones like the Russia-Ukraine theatre, providing our island nation with a degree of natural insulation.

However, this geographic advantage offers only limited protection. A striking 44% of Irish firms report experiencing direct financial impacts from global geopolitical instability, demonstrating how interconnected our modern economy has become.

Real Impacts on Irish Business

The consequences extend far beyond abstract concerns. "A local example would be supply chain disruption," Ingle noted. "The Ukraine war affected Irish retailers and manufacturers and what that did was led to shortages and cost increases as well."

Looking ahead, the threat looms even larger. Geopolitical risk is projected to become the second-highest concern for businesses over the next three years, signalling that this challenge will only intensify.

Cyber Threats Remain Paramount

Despite the rise of geopolitical concerns, cyber attacks and data breaches continue to dominate corporate risk assessments worldwide. The threat has evolved rapidly, with artificial intelligence contributing to a staggering 53% increase in attempted social engineering incidents over the past year.

Recent high-profile attacks have brought this reality home to Irish businesses. "We've seen cyber incidents in Ireland in the aviation sector, M&S has had a huge cyber attack recently," Ingle observed. "It's not just that they disrupt essential services and public confidence but they have financial impact on organisations as well."

Climate Challenges Add to Complexity

Weather and natural disasters rank ninth among current risks for Irish firms, a concern made tangible by recent storms including Bram and Eowyn. These events create cascading disruptions across interconnected systems.

"We don't know why the Luas stopped but it could have been because of the storm," Ingle explained. "It impacted on power, it impacted on employees sitting at Luas stop stations, it impacted on firms not having the productivity, and it will impact on finance."

Call for Strategic Resilience

Perhaps most concerning, the survey reveals that many companies lack adequate planning to address these mounting challenges. This gap between risk awareness and preparedness demands urgent attention from Irish business leaders.

Ingle advocates for a fundamental shift in approach: "They should be thinking about risk not just as a compliance tool but also a strategic tool to help them grow their business. They need to make better use of data and analytics to actually inform how they manage their risks holistically so they can be resilient for the future."

As Ireland continues to position itself as a progressive, European-focused nation committed to social democracy and economic justice, our business community must adapt to this new landscape of interconnected global risks while maintaining the innovative spirit that has driven our economic success.