KPMG’s Geopolitical Risks Report for 2025 & How Your Business Can Adapt

Key Takeaways

• Geopolitical Shifts Impact Global Trade: Emerging economic hubs and shifting global power dynamics are challenging traditional trade relationships. Businesses can adapt by diversifying investments and exploring new regional alliances.
• Regulatory and Tax Complexity: A fragmented regulatory environment is creating new challenges for businesses. Companies should stay ahead of tax and compliance changes to gain a competitive edge and attract investment.
• Technology Competition and Fragmentation: The growing geopolitical rivalry over technology, especially in AI and quantum computing, demands businesses invest in adaptable tech infrastructures and prioritize cybersecurity.
• Supply Chain Vulnerabilities: Geopolitical tensions, climate events, and cyberattacks are putting strain on global supply chains. Diversifying sourcing strategies and investing in sustainable energy solutions can help businesses build resilience.
• Workforce Demographics and Preferences: Aging populations and shifting worker preferences pose challenges for talent acquisition. Businesses can adapt by investing in re-skilling programs and creating hybrid work environments that align with changing workforce values.

Deep Dive

The world is shifting beneath our feet. From the rising tension between global powers to the rapidly evolving tech landscape, businesses are facing geopolitical risks that feel more real and immediate than ever. These risks no longer sit in the background of boardroom discussion but are at the forefront of our lives now, shaping strategic decisions on a daily basis.

As the world grapples with unprecedented geopolitical shifts, businesses are facing risks that are no longer theoretical, they’re real and tangible, affecting everything from global supply chains to talent management. KPMG’s "Top Geopolitical Risks 2025" report explores these risks in detail, offering insights into the challenges and opportunities businesses will face in the year ahead.

This report highlights how shifting global power dynamics, new trade alliances, evolving regulations, and technology competition are changing the landscape of business. The good news? These challenges are not just threats—they’re opportunities in disguise. By approaching these risks strategically, businesses can not only protect themselves but also position themselves for growth and success in a turbulent world.

Regulatory and Tax Complexity

With geopolitical shifts come regulatory changes, and they’re happening at lightning speed. Different countries are adopting tax policies at varying rates, and the once-unified global tax approach is now fragmented. Some countries are embracing minimum global taxes, while others are stepping away from multilateral agreements, making it harder to navigate the regulatory landscape.

For businesses, the key is to be nimble. The complexity of global regulations can be seen as a competitive advantage for those who are prepared. By staying ahead of regulatory changes and embedding flexibility into their compliance strategies, companies can reduce risk while also attracting investment. The green transition, though faced with hurdles, still offers opportunities for those who invest early.

The Battle for Technology Dominance

In a world of increasingly fragmented technology regulations, the competition for dominance is only intensifying. With concerns over national security driving shifts in alliances, the U.S. and China are at the forefront of a geopolitical tech arms race, particularly in fields like AI and quantum computing.

While these tensions may seem daunting, businesses have the chance to make technology work for them. Investing in adaptable IT infrastructure, enhancing cybersecurity, and focusing on ethical, responsible AI integration can help mitigate the risks associated with these geopolitical tech battles. By being strategic and forward-thinking, businesses can harness the power of emerging technologies while safeguarding their operations from geopolitical disruption.

How to Build Resilience

From trade protectionism to cyberattacks and climate change, global supply chains are under increasing pressure. Key shipping routes are at risk, and access to essential resources like energy and raw materials is becoming more unpredictable. As companies face supply chain disruptions, the need for resilience has never been greater.

Businesses have an opportunity here to rethink their supply chain strategies. Diversifying sourcing methods, creating circular supply chains, and investing in sustainable energy solutions can all help reduce vulnerability. A shift towards localized supply chains can also help companies navigate the risks of global uncertainty, allowing them to maintain control over critical resources.

The Changing Face of Talent

Aging populations, shifting worker preferences, and an uptick in anti-immigration policies are just some of the challenges companies will face in managing their workforces in 2025. At the same time, the rapid pace of technological change and the integration of AI into daily operations are transforming the workforce landscape in ways many businesses are still trying to catch up with.

But there’s a silver lining. By investing in re-skilling programs, offering hybrid work options, and aligning corporate culture with changing workforce values, businesses can meet the challenges head-on. In fact, the companies that embrace these changes will be best positioned to attract and retain top talent. A dynamic, adaptable workforce is more important than ever, and investing in that future is an opportunity businesses can’t afford to miss.

What Can Business Leaders Do Today?

The “Top Geopolitical Risks 2025” report lays out the risks, but it also offers concrete steps that business leaders can take today to ensure their companies not only survive but thrive in this unpredictable landscape. Here are some actionable strategies:

• Expand Capital Sources: Invest in diverse funding avenues, especially private capital, to stay flexible and responsive.
• Strengthen Compliance: Don’t just react to regulatory changes, anticipate them. A strong compliance framework can serve as a strategic advantage, not a burden.
• Invest in Cybersecurity: Safeguarding your business’s data and infrastructure isn’t just a technical necessity, it’s a competitive imperative.
• Localize and Diversify Supply Chains: Shortening supply chains and considering friend-shoring options can help reduce dependence on volatile global markets.
• Prioritize Workforce Development: Re-skilling, hybrid work options, and aligning culture with changing values can create a workforce ready for the challenges of tomorrow.

KPMG’s "Top Geopolitical Risks 2025" report offers a roadmap for businesses. The geopolitical landscape is shifting, but rather than seeing it as a threat, it’s time for businesses to embrace these changes as opportunities. With the right strategies, businesses can not only navigate the challenges ahead but emerge stronger, more resilient, and more competitive than ever.

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