In a landscape marked by geopolitical volatility and strategic realignments, infrastructure investment has become inseparable from risk management. From energy security to digital connectivity, global infrastructure decisions are now made against a backdrop of shifting alliances, trade disputes, and regional conflicts.
Risk managers are increasingly pivotal, as investors and stakeholders must assess not just financial viability but also exposure to political and regulatory change, supply chain fragility, and long-term sustainability risks.
Roberta Brzezinski, partner at Control Risks, notes how geopolitical events are influencing infrastructure investment priorities across energy, technology, and global trade corridors.
“Infrastructure and geopolitics are inextricably linked – from the development of public-private partnerships (PPPs) in response to inflation and high interest rates caused by geopolitical turbulence in the 1970s to Donald Trump rolling back Biden-era momentum for renewables in the first weeks of his second term,” Brzezinski said.
Brzezinski notes that energy transition is no longer seen in isolation. “Globally, governments have shifted to viewing the energy transition as interconnected with energy security,” she said, pointing to an increase in national policy measures designed to expand renewable capacity and reduce dependency on external energy sources.
For risk managers, this shift introduces new challenges in evaluating the stability of energy supply chains and the potential for regulatory shifts that could impact long-term investments.
She highlighted a surge in spending, noting how infrastructure investment is set to exceed US$3 trillion for the first time in 2024. Of this, US$2 trillion is going to clean energy technologies and related infrastructure. This unprecedented investment scale amplifies the need for robust risk management strategies to navigate market volatility and geopolitical uncertainties.
“Electricity grids have benefitted from the largest percent increase in investment in recent years (reaching US$85 billion); however, even with increased investment, electricity still lags well behind other key areas,” she said. Risk managers must address the uneven pace of grid modernization, which poses risks to energy reliability and project timelines.
This transformation is uneven, however. “Growth in clean energy infrastructure investment remains highly concentrated among the key economies of China, the US and the EU, supported by legislation such as the EU’s REPowerEU,” she said. For investors, this concentration introduces risks tied to over-reliance on a few major markets, requiring careful diversification strategies.
“The amount of investment in clean energy is rising in India, Brazil, and parts of Southeast Asia and Africa amid new policy initiatives and improved grid infrastructure, providing key indicators of fledging growth,” Brzezinski said.
These emerging markets present opportunities but also heightened risks due to less mature regulatory frameworks and potential political instability, areas where risk managers play a critical role.
Russia’s invasion of Ukraine has been a turning point for European energy policy. “FDI inflows into Europe tumbled after the onset of the Russia-Ukraine war,” Brzezinski said. The conflict has elevated geopolitical risks, forcing investors to reassess exposure to regional instability.
Over time, she noted, the conflict has “increased support within the bloc for adopting cleaner technologies and diversifying energy supplies more broadly.” This pivot underscores the importance of risk management in adapting to rapid policy changes and securing alternative energy sources.
Infrastructure funding is also being used as a geopolitical tool, particularly in developing countries. Brzezinski said China’s Belt and Road Initiative (BRI) has continued to evolve and is now focused on sustainability, open markets, and high standards of development.
For risk managers, the BRI’s evolution introduces new considerations around project transparency and environmental risks.
She added that “future projects will increasingly be assessed for quality, risk and impact.” This focus aligns with the growing role of risk management in ensuring infrastructure investments meet stringent global standards.
“The US and others have announced similar development initiatives, such as the India-Middle East-Europe Economic Corridor (IMEC) and the Partnership for Global Infrastructure and Investment (PGII),” she said. These competing corridors create a complex risk landscape, as investors must navigate overlapping geopolitical interests and potential conflicts.
IMEC, for instance, includes plans for pipelines to transport electricity and hydrogen to Europe and India, produced using renewable sources in the Arabian Peninsula. Such ambitious projects require risk managers to assess long-term viability amidst regional rivalries and technological uncertainties.
As these trade corridors develop, countries are aligning themselves to maximize advantage. “Saudi Arabia will benefit economically by maximising its exposure to US and Chinese-related trade corridors, though Saudi-UAE competition could challenge smooth trade flows,” Brzezinski said. This competition introduces risks to trade stability, a key concern for infrastructure investors.
Technological innovation is another force reshaping infrastructure priorities. Brzezinski pointed to new energy technologies such as small modular reactors (SMRs) and green hydrogen. These emerging technologies carry both opportunities and risks, particularly around scalability and regulatory approval.
“Brazil, Colombia, South Korea and India have all announced support for domestic green hydrogen production,” she said. India, meanwhile, has maintained a neutral foreign policy stance to secure a diverse range of partnerships. Risk managers must evaluate the geopolitical implications of such neutrality, as it may affect partnership reliability.
“Türkiye has reportedly started talks with the US in an attempt to attract US companies to its nuclear energy market,” Brzezinski said. “South Korea is also a prominent nuclear energy country and facilitates international projects regularly, such as building the UAE’s first nuclear power plant.” These nuclear initiatives require rigorous risk management to address safety, regulatory, and geopolitical concerns.
AI is also shaping infrastructure investment priorities. Earlier this year, the US announced a private sector investment of up to $500 billion to fund infrastructure for AI. Several technology firms are incorporating clean energy, including nuclear, into large-scale data centres
The rapid rise of AI infrastructure introduces risks tied to energy demand and technological obsolescence, areas where risk managers are increasingly focused.
“Infrastructure is entering an expansive new phase,” Brzezinski said. “But as geopolitics continues to rattle markets, investors must look far ahead to manage uncertainty. Studying geopolitical scenarios should always be part of long-term planning. Companies that expect complexity will have the advantage.”
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