Eurasia Group, the world’s leading firm in research and consulting on global political risks, has published its “Top Risks,” the highly anticipated annual review of the company’s ten biggest threats to the trajectories of nations, industries, and institutions. Revealed every January, Top Risks helps investors, businesses, and members of the public prepare for and respond to opportunities and challenges wherever they invest or do business. The report is co-written by Eurasia Group’s president and founder, Ian Bremmer, and the chairman, Cliff Kupchan.
You can view the full report here: www.eurasiagroup.net/issues/top-risks-2023.
1- Rogue Russia: A cornered Russia will transform from a global player into the world’s most dangerous pariah state, posing a serious and widespread threat to Europe, the U.S., and beyond. Ensnared in Ukraine, with little to lose from greater isolation and Western retaliation, and facing intense domestic pressure to demonstrate strength, Russia will resort to asymmetric warfare against the West to inflict damage, rather than employ open aggression that relies on military and economic power that Russia no longer possesses.
In summary, Rogue Russia is a threat to global security, Western political systems, cybersecurity, and food security. Not to mention every Ukrainian civilian.
2- Maximum Xi: Xi Jinping now commands the Chinese political system without rival since Mao, with (very) few limits on his ability to advance his statist and nationalist policy agenda. But, without dissenting voices to challenge his views, Xi’s capacity to make major long-term mistakes is also unmatched. This poses a huge global challenge, given China’s disproportionate role in the global economy.
3- Weapons of Mass Disruption: Recent advances represent a radical shift in the potential of artificial intelligence (AI) to manipulate people and disrupt society, and 2023 will be a turning point for this trend. A new form of technology, known as generative AI, will allow users to create realistic images, videos, and texts with just a few guiding phrases. Large language models will pass the Turing test — a Rubicon for machines’ ability to mimic human intelligence. Advances in deepfakes, facial recognition, and voice synthesis software will make control over one’s own image a relic of the past.
4- Inflation Shockwaves: The global inflation shock that began in the United States in 2021 and took hold worldwide in 2022 will have powerful economic and political effects in 2023. It will be the main driver of global recession, increase market volatility and financial stress, and produce disruptive effects on politics across regions worldwide.
5- Iran in a Corner: Nationwide anti-government protests continue. At the same time, Tehran has dramatically escalated its nuclear program, virtually ending any chance of reviving the nuclear deal. And now Iran is supplying lethal weapons to Vladimir Putin’s army. As Iran faces turmoil at home and reacts abroad, this year will bring new confrontations between the Islamic Republic and the West.
6- Energy Crunch: A combination of geopolitics, economics, and production factors will create much tighter conditions in the energy market, particularly in the second half of 2023, raising costs for households and businesses, increasing the fiscal burden for importing governments, and widening the rift between OPEC+ and major consumers.
7- Arrested Global Development: Over the last two generations, global GDP has tripled, nearly every country has become wealthier, and more than a billion people have escaped extreme poverty to join the ranks of the first global middle class in history. This progress has been reversed by interconnected shocks: the Covid-19 pandemic, the Russia-Ukraine war, and the global inflation outbreak. In 2023, billions of people will become more vulnerable as economic, security, and political gains are lost. The global middle class will shrink, and greater political instability, both within and between countries, will follow.
8- Divided States of America: The 2022 midterm elections interrupted the slide toward a constitutional crisis in the next U.S. presidential election, as voters virtually rejected all state governor or attorney general candidates who denied or questioned the legitimacy of the 2020 presidential election. But the U.S. remains one of the most polarized and dysfunctional advanced industrial democracies in the world as it enters 2023. Extreme policy divergences between red and blue states will make it harder for American and foreign businesses to treat the U.S. as a coherent single market, despite obvious economic forces. And the risk of political violence remains high.
9- Tik Tok Boom: Born between the mid-1990s and early 2010s, members of Generation Z are the first to have lived their entire lives without the internet. Digital devices and social media have connected them across borders, creating the first truly global generation. And this makes them a new political and geopolitical actor, especially in the United States and Europe. Generation Z has both the ability and motivation to organize online and reshape corporate and public policies, making life difficult for businesses everywhere and disrupting politics with the click of a button.
10- Water Stress: This year, water stress will become a global and systemic challenge… while governments will still treat it as a temporary crisis. Water stress requires a transition from water crisis to water risk management. This shift will not materialize in 2023, leaving investors, insurers, and private companies to figure out on their own how to deal with this challenge.