Low-velocity risks develop gradually and take longer to materially affect investment outcomes. ESG-related geopolitical risks—such as evolving environmental regulations, long-term governance reforms, or shifting social standards—typically unfold over years or decades. Although they can have a significant impact, the change is often slow-moving, making them best classified as low-velocity. In contrast, high-velocity risks like military conflict or financial sanctions can affect markets almost immediately.

Sanctions such as asset freezes and financial restrictions directly target the financial resources and economic capabilities of specific individuals or groups. These measures constrain access to financial systems and markets, thereby leveraging monetary influence as a means of political pressure. While such actions might indirectly affect overall economic relations, they are primarily classified as a financial tool of geopolitics rather than being specifically aimed at national security or general economic policy.

Exogenous risks are geopolitical risks that are unanticipated and arise suddenly from outside the expected system. These include shocks such as surprise coups, terrorist attacks, or abrupt geopolitical conflicts. They differ from: -Thematic risks, which are long-term and anticipated, such as climate change or demographic shifts. -Event risks, which are known to occur (e.g., elections or policy announcements), but have uncertain outcomes. In this case, the military coup is unanticipated, making it a classic example of an exogenous risk.

Black swan risks are a type of exogenous geopolitical risk—they are rare, unanticipated events that have severe short-term consequences. Although unlikely, these events can cause rapid shifts in market behavior, such as panic selling or liquidity freezes. They differ from thematic risks, which develop slowly and affect long-term strategy. Black swans are difficult to predict but require contingency planning due to their potential for immediate disruption.

Autarky is a geopolitical and economic strategy where a country aims to be self-reliant by minimizing or eliminating external trade. This approach often involves domestic production of all essential goods and services, regardless of cost or efficiency. It reflects nationalism and non-cooperation, contrasting with other models like: -Bilateralism (one-on-one cooperation with other nations) -Multilateralism (cooperative engagement in global trade systems) A country practicing autarky chooses isolationist policies to maintain sovereignty and control over its economy.

Nationalism emphasizes a focus on domestic priorities, sovereignty, and reduced foreign dependency. Behaviors such as autarky (economic self-sufficiency) and bilateralism (one-on-one agreements rather than multilateral cooperation) align with nationalist ideals. In contrast, hegemony, particularly when tied to global leadership or influence in international institutions, reflects a globalized and noncooperative stance that prioritizes shaping the world order—making it least consistent with a purely nationalist approach.

Bilateralism involves forming one-on-one cooperative agreements, typically to advance national interests without fully engaging in broader, multilateral systems. This behavior reflects nationalism—a focus on sovereign decision-making—and cooperation, since the country still engages with others through direct partnerships. It contrasts with: Autarky (non-cooperation + nationalism) Hegemony (non-cooperation + globalization) Multilateralism (cooperation + globalization) Thus, bilateralism is best characterized by cooperation and nationalism.

Geopolitical risks tend to have greater effects during recessionary phases of the business cycle because economies are already vulnerable, and shocks—such as war, sanctions, or trade disruptions—can exacerbate downturns. While these risks can affect both individual companies and entire regions, they are not limited to broad impacts, nor are they beyond the reach of tools like scenario analysis, which are often used to model their potential effects.

The IMF's core mission includes promoting international monetary cooperation, ensuring exchange rate stability, facilitating global trade, and providing short-term financial assistance to countries experiencing balance of payments problems. In contrast: -The World Bank focuses on long-term development and poverty reduction. -The World Trade Organization (WTO) is responsible for handling trade disputes and regulating international trade rules. Therefore, only the IMF is tasked with managing global monetary stability and related financial coordination.

Deploying military forces or strengthening defense capabilities to assert sovereignty or deter threats falls under national security tools, which are focused on protecting a country's physical borders, citizens, and strategic interests.