PODCAST | From shocks to shifts: how corporates and economists interpret geopolitical risk - Trade Treasury Payments

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PODCAST | From shocks to shifts: how corporates and economists interpret geopolitical risk

• Geopolitical risk is no longer defined by sudden shocks alone, but by gradual shifts reshaping global trade and financial systems.
• While corporate leaders focus on operational responses to immediate threats, economists track the long-term implications of structural change.
• To unpack these perspectives and explore how businesses and financial institutions can respond, Trade Treasury Payments’ (TTP) Deepesh Patel spoke with Marieke Blom, Chief Economist and Global Head of Research at ING.

Those who deal in international markets are forced to contend with the ever-volatile nature of the world. Natural disasters in distant corners of the globe have as much ability to disrupt your supply chains as an election in a neighbouring country does to alter decades-entrenched trade policy. Nothing stays static.

Businesses and financial organisations have no choice but to determine whether they are navigating real hazards or reacting to noise. The distinction matters. An overreaction can hinder opportunity, while inaction may expose vulnerabilities. The reactions to these risks and changes, which often vary widely between economists and corporate leaders, can have immense impacts.

Corporate decision-makers need to be operational when assessing risks. What changes can make to mitigate those risks for the business and ensure sustained continuity. Economists, however, tend to focus on the bigger picture. They are able to meticulously examine the slow-moving disruptions that will shape the economic and geopolitical conditions, over the long term. 

To learn more about how businesses and financial institutions assess the risks and opportunities presented by geopolitical uncertainty, Deepesh Patel spoke with Marieke Blom, Chief Economist and Global Head of Research, ING. 

Disconnect between economists and corporate leaders on geopolitical risk

Businesses and economists rarely see risk in the same way. 

Corporate leaders have a greater need to evaluate immediate threats, like tariffs, sanctions, or shifting supply chains, while economists generally have the capacity to take a step back and consider more systemic vulnerabilities and long-term consequences. 

Blom said, “I’m an economist, so I tend to be more gloomy than the average business leader. In order to lead a business, you also need a good dose of optimism.”

For example, while an economist is more likely to see trade restrictions as a sign of deeper geopolitical fragmentation, a business leader may be more apt to view them as a problem that they can solve by tweaking logistics, shifting suppliers, or investing in local production.

Take supply chains. The US-China tariffs implemented under Trump’s first presidency forced businesses to reconsider their supply chain strategies. Although patterns have shifted, we remain at a peak in global integration. As the chart below shows, global trade volumes have remained resilient even as firms adapt their strategies. 

Some diversified by shifting production to Vietnam, Mexico, or Eastern Europe. Others absorbed costs, betting that tensions would ease. Over time, businesses adapted, and what once seemed like a major disruption became just another factor in decision-making.

Blom said, “It’s important for people within banks to realise that from a macro lens, a trade war is negative but not dramatic. You need to prepare for it, but not in a way in which you prepare for a shock, which is a different approach. It’s much more thinking about a gradual change in the stance.”

From an economic standpoint, however, these gradual adjustments reflect a deeper trend: a world inching away from the efficiencies of globalisation toward a more segmented trade system, the economic costs of which may take years to materialise.

The role of governments and financial institutions

Governments play a critical role in managing economic uncertainty. Their interventions, which could take the form of subsidies, stimulus packages, or regulatory changes, can stabilise industries and prevent crises from escalating or they can create dependencies and unintended consequences in the system.

During the energy crisis, for example, European governments stepped in with subsidies and price caps to shield businesses and households. This immediate relief prevented economic turmoil but masked underlying vulnerabilities. Companies that would have otherwise adjusted to higher energy costs received a cushion that let them delay the necessary adaptation. 

Blom said, “When it comes to financial services, what you’re seeing now is that Europe understands that in order for us to be powerful in the future, we need economic power. In order for us to have economic power, we need a strong financial services sector. When you look at it, there’s room for further efficiencies. There’s room for further cross-border integration in order to benefit more from economies of scale.”

Banks and financial institutions, however, need to be aware that government intervention can distort market signals and create a false sense of security. The challenge for policymakers and financial leaders alike is knowing when to intervene and when to allow market forces to play out.

Europe’s position in a changing global order

Europe remains a formidable trading bloc, yet its position is very different than it was just 10 years ago. Gone are the days of relentless trade expansion, something which European businesses are recalibrating to rather than retreating from. 

Companies beginning to reduce their reliance on a single market by investing in regional supply chains, because they are realising that they can no longer assume unfettered access to international markets, which makes resilience and optionality more important than efficiency.

For financial institutions, this means rethinking risk. 

The key is distinguishing between immediate disruptions and long-term structural changes. Short-term volatility (e.g., new tariffs, supply chain hiccups, regulatory adjustments) can often be managed with flexibility and strategic adaptation, but underlying shifts (e.g., fragmenting trade relationships, economic decoupling, regionalisation) demand deeper consideration.

Financial leaders must resist the temptation to overreact to headlines while remaining vigilant to the broader trends. In today’s world, the secret to success lies in preparation, not panic.