Global political risk is reaching a record high, fuelled by armed conflict, institutional fragility and persistent social tensions, according to trade credit insurer Coface.

After a historic election year in 2024 involving 70 countries that brought political risk to the forefront of the global stage, 2025 offers continued instability and tension, reflected in Coface’s global political risk index, which reached a record high of 41.1% in 2025. It now exceeds the peak reached at the height of the Covid-19 pandemic.

The global score for the index found that 68 out of 166 countries analysed present a higher risk than last year, with 106 countries above their pre-pandemic average. It points to the convergence of several factors affecting both emerging economies and advanced democracies.

Anna Farrugia, economist at Coface, said: “Higher than ever, the 2025 score of the Coface political risk index confirms a fundamental upward trend that has been alerting us for several years. We are observing a dual phenomenon: conflicts that are taking root, driving up overall risk, and a political and social climate that remains fragile, where frustration and instability continue to fuel tensions.”

Coface says that the ‘conflicts’ component is the main factor in the deterioration of political risk. The number of conflicts recorded at the national level has increased again, a rise largely dominated by two major hotspots in Ukraine and Gaza. It says that these conflicts are taking root and crystallising geopolitical tensions, weighing on both regional stability and global supply chains.

Taken alongside internal unrest in other areas of the world, the index suggests that political and social risk is no longer a one-off phenomenon but instead should be viewed as the new normal, and its impact considered on development strategies and investment decisions.

Ruben Nizard, head of political risk analysis and sector research at Coface, said: “Political and social risk is entering a new era. What was once considered a temporary disruption has become a structural risk. The combination of geopolitical rivalries, polarisation, energy transition and technological challenges ensures that this higher level of risk will persist.”

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