Geopolitical instability is a concern for European executives, warns BDO.

 

La growing geopolitical instability consolidates itself as one of the biggest challenges for European companies, according to a study released by BDO, a leading global professional services firm. The report notes that 27% of managers consider these tensions as a main risk for their organizations, a concern that has been heightened by the conflict in Israel and Palestine and the possibility of a new presidency of Donald Trump in the United States.

 

Although the regulatory risk remains the main concern for 37% of respondents, prospect of a trade war is dramatically raising the alarm over trade tensions. Both factors, the regulatory and geopolitical, are intrinsically linked, given that recent US legislation is taking a direction opposite to that of the European Union, generating considerable uncertainty and complicating compliance with European regulations for companies.

 

 

Although the regulatory risk While it remains the top concern for 37% of respondents, the prospect of a trade war is dramatically raising concerns about trade tensions.

 

 

Enric DoménechDoménech, the partner in charge of Risk Advisory Services at BDO in Spain, emphasized the need for proactive risk management. “In an increasingly complex international environment, it is essential that companies proactively manage risks to ensure the continuity and success of their businesses,” Doménech stated. He added that “the ability to anticipate potential scenarios of political instability and adapt business strategies quickly will make the difference between companies that manage to be resilient and those that are exposed to uncertainty.”

 

The BDO study highlights that many companies may not be adequately prepared to deal with the drastic changes in geopolitical relations. Despite this, the main strategies that managers consider to mitigate these risks include: strengthen alliances with local regulatory bodies y Take advantage of risk forecasting and monitoring tools.

 

However, a worrying figure is that Only 34% of the surveyed executives plan to diversify their supply chains as a protective measure. Following the imposition of tariffs by Donald Trump, the perception of crisis and uncertainty has escalated significantly, suggesting that the diversification of supply chain and the revaluation of commercial markets will likely experience an increase in the second half of 2025.

 

This situation highlights a growing awareness, and vulnerability, of European companies to the impact of geopolitical tensions on their operations. Given the escalating global uncertainty, companies are urged to rethink your priorities, adopt technological tools such as Artificial Intelligence for more efficient and proactive risk management, and integrate a dynamic risk management culture in their organizational processes. Only then will they be able to adapt and thrive in today's challenging international landscape.

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