How Climate Change will drive Geopolitical Risk: And how companies can prepare

Last year was when climate risks become a reality. Major rivers including the Rhine, Po and Yangtze fell to record lows. Heatwaves in China forced many factories to close over the summer. Pakistan suffered a devastating once in a century flooding and extreme heatwaves.

Climate change will make extreme weather such as the flooding or heatwaves more frequent and deadly. Floods can cause great human suffering, destroying homes and businesses and encourage the spread of water borne disease like cholera. In Pakistan’s case, flooding also dealt a deadly blow to an already fragile economy. The chaos and disruption of flooding means lower economic growth, higher debt payments and a massive bill for reconstruction.

The ripple effect of climate change goes well beyond the headlines of new extremes of weather; the impacts will spill over into politics, economics, and society, radically reshaping the world. Climate change acts a force multiplier, accelerating existing threats (extreme weather, flooding and drought have always been with us) to make them more common and deadly.

Conflict and Climate

Climate change induced drought and desertification in the Sahel region of Africa has driven the rise of extremist and militant groups in the region. Climate change and increasing demand has seen water sources dry up across an already water stressed region. This has pushed many farmers and pastoralists from the land.

As traditional livelihoods disappeared desperation pushed locals into the arms of extremist groups such as Boko Haram and Daesh. The rise of these groups have sparked a number of conflicts across the Sahel, pitching government forces against these extremist groups.

A hotter world is a more unstable and dangerous one. A world facing more hunger, drought and conflict will experience more geopolitical conflict as countries grapple over dwindling resources. The construction of the Grand Renaissance dam in Ethiopia has sparked anger in Egypt because it threatens the flow of water on which it is highly dependent. If as expected, the Nile shrinks further due to climate change and growing demand for its water. Egyptian agriculture will become increasingly unviable.

Climate risks should not be seen in isolation, rather as a series of shocks, which will overlap and overwhelm governments

As temperatures rise, the likelihood of mass crop failures across the globe increases. Already many of the world’s breadbaskets are under pressure from record-breaking heat and water shortages. The Indus and Ganges River basins in South Asia face the overlapping burdens of rising demand, extreme disruptive weather, and rising temperatures all factors that threaten the region’s status as a breadbasket.

A mass crop failure one or more key crop growing region such as the Ganges Basin, Euphrates or Nile basins would impact millions of people creating famine, and potentially engulfing the world in economic and political chaos. Widespread crop failure along with extreme heatwaves would likely see mass migration, that could see the movement of millions of starving and desperate people attempt to cross borders.


The movement of Syrian refugee into Europe caused a major political crisis as countries such as Turkey and Greece grappled with millions of desperate people flocking to their borders. Academics have linked the long running refugee crisis sparked by the Syrian war to climate change. A multi-year drought pushed many poor and hungry farmers into cities created an angry, politically volatile movement of people eager to protest at the government.

Policy makers and scientist are careful not to attribute an event solely to climate change. However, it will make events like the Syrian drought and subsequent war more common and frequent.

Systemic Risk

One or more major crop failures would trigger higher global food prices. In turn, this would put major pressure on economies across the world and unleash unpredictable political reactions. Governments may turn to isolationist policies such as export controls on food in an attempt to protect their own populace. Nations could lurch toward extreme politics or lash out at neighbours in an attempt to seize resources such as supplies of water.

The Covid pandemic was in many ways a foretaste of the future, the virus itself was a major killer, but the second and third impacts were also enormous, think of the unpredictable economic disruption and societal change – all factors that are still unfolding. The Chinese government shifted from strict lockdowns to relaxing Covid restrictions in a matter of weeks causing confusion and disruption in and outside China.  

How can organisations prepare?

Companies need to prepare for a more unstable world. One leader in this regard has been the US military who recognises Climate Change as a “destabilizing and potentially catastrophic transboundary challenge”, and has prepared detailed scenarios so it is prepared for a wide range of threats to unfold.

Other organisations should follow this example and create credible climate related scenarios that could influence their own operations. This might include deep and disruptive economic shocks and loss of markets in badly afflicted regions, supply chain interruptions, and widespread political uncertainty.

Organisations should develop simulations and exercises that allow them to understand how these scenarios will this affect their operations, and how they should respond. Successful firms of the future will have a plan for dealing with climate change. Firms that plan successfully can also thrive in these adverse circumstances.

While the picture painted around climate change is often bleak, there are causes for optimism. The pressures of this new world could spark a powerful reaction as countries extend and develop innovative technologies to mitigate, or even reverse the damage of climate change (think of how quickly Covid vaccines emerged). The same pressures could even see the world pull together politically to develop successful policies and initiatives to combat this existential threat.

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