Top geopolitical risks 2025

At KPMG in Malaysia, instilling confidence—whether in our people, our clients, or the communities we serve—starts with one fundamental principle: trust, built on our values of quality, accountability, and integrity.

Our Transparency Report 2024 reflects how we are continuously evolving our approach to quality in a rapidly changing landscape. With AI and ESG reshaping business priorities, and with trust in disclosures and decision-making more critical than ever, the approach to quality must not only be multidisciplinary but also proactive, forward-looking, and resilient.

This report highlights the strength of our quality management system, which supports greater accountability, transparency, and long-term progress. It also outlines how we are embracing innovation—through globally consistent audit and ESG assurance methodologies, and by enhancing the use of platforms like KPMG Clara through the ethical integration of generative AI. These tools empower our professionals to deliver smarter, more seamless audits.

At the core of this journey are our people, whose dedication and focus shape our approach to quality. Their commitment to doing the right thing is key to driving change. By leveraging the strength of our global network and local expertise, we continue to fine-tune our efforts, delivering high-quality audit and assurance services that uphold the public interest.

We encourage you to read this report to learn how we are building a values-led firm of the future—an organization that we can be proud of and that our clients, stakeholders, and communities can continue to trust.

In today’s complex geopolitical landscape, there is no panacea for the risks businesses face. Organizations must address chokepoints, fragmented regulations, and piecemeal solutions head-on, integrating geopolitical risk into their core business strategy. Combined with a high degree of agility and responsiveness, resilience is possible—even in the face of disruption and unpredictability.

Foong Mun Kong

Managing Partner at KPMG in Malaysia

Top trends

Tectonic shifts in power, economic centers and trade

New trade alliances and investment hubs are redefining global power dynamics. The US is imposing tariffs, eliciting retaliatory responses, while new economic ‘nodes’ are emerging outside of traditional investment centers.

A complex, fragmented regulatory and tax environment

Regulations and tax are evolving at different speeds in different geographies. Minimum global tax is becoming adopted by many countries, while others are withdrawing from multilateral tax policy.

Demographic, technological and cultural pressures on workforces

Aging populations, mass retirement, falling birth rates (in developed markets), changing worker preferences, culture wars, AI integration and reskilling bring major workforce challenges.

A fast-moving and politicized technology landscape

Shifting alliances (based upon national security concerns) and fragmented regulations add to complexity, while the emergence of new Generative AI (Gen AI) players challenges US dominance. Regulators are struggling to keep pace with new Gen AI solutions, and a rolling back of regulations could leave AI models out of control. Geopolitical competition in AI and other technologies (i.e. quantum computing) is creating technological blocs around the US and China, thus jeopardizing international cooperation and access.

Multiple threats to supply chains, assets and infrastructure

Geopolitical rivalries, trade protectionism, conflict, competition for resources, cyberattacks and climate events place severe strains on globally exposed businesses. Wars and tensions pose rising threats to key shipping choke points. Countries are adopting protectionist measures to safeguard and diversify their supply chains, including energy, food and critical minerals.

Key considerations for business leaders

01

Broaden sources of investment capital, including increasing private capital.

02

Build stronger compliance capabilities to monitor and respond to evolving regulations.

03

Improve resilience and reputation through cybersecurity and data governance.

04

Focus on and invest in corporate culture to help ensure alignment with changing values and workforces.

05

Build geographically shorter, simpler supply chains, along with considering friend-shoring.

Methodology

The report presents insights derived from extensive research, data analysis and case studies, including interviews and workshops with more than 100 KPMG professionals working across many global sectors and with clients of all sizes. Our secondary research includes KPMG reports, literature, academic papers, industry reports, and intergovernmental organization publications.