based armed conflict are the risks most impacted by Geoeconomic confrontation in the next two years (Figure 26). In a worst-case scenario, more intense decoupling between Eastern and Western blocs would have profoundly negative implications on global economic growth. Non-aligned countries face particular risks if they do not find a new balance. Even partial decoupling, in trade, investment, finance and technology ecosystems, could significantly raise costs for businesses and slow global economic activity. Multilateral coordination frays further Geoeconomic confrontation is already contributing to a loss of trust affecting international relations. But the reverse is also happening: governments are more likely to take hostile actions on trade, investment and other geoeconomic issues when they feel that the rules-based international system is weakening and they have less to lose than before. This vicious cycle looks set to continue over the next two years. As multilateral institutions become weakened by unilateral actions from some governments, others are unable or unwilling to counter them.13 Deep funding cuts at many international institutions are leading to a retrenchment of development and aid activities. At the same time, newly emerging multilateral entities are being developed by governments that do not subscribe to the institutions of the unipolar world order as a platform for pursuing their own national interests and to re- write the rules of the game. In this fractured global landscape, transnational threats – from climate change to combating pandemics and organized crime – are becoming more difficult to manage. A vacuum in global governance is building, and it could take years before it is clear how deep it runs and what could take its place. Many governments view strategic autonomy as a necessary response to this building vacuum and are expanding their countries’ defence capabilities. Wholly new weapons, including those enabled by AI, are also creating new risks. In this unfolding environment, which is both less predictable and more militarized, there is likely to be a heightened risk of conflicts, with less powerful countries especially vulnerable. According to the 2025 Global Peace Index, there are more state- based armed conflicts ongoing than at any time since World War II; key conflict-risk indicators are at their worst levels since World War II; and several dozen countries are experiencing a worsening in relations with neighbouring countries.14 Local polarization amid global fractures Geopolitical instability is deeply intertwined with domestic state fragility and social instability. According to the Fund for Peace Fragile States Index report, country-level fragility is worsening and becoming more widespread. Previously stable democracies are not exempt from this trend.15 Drivers of increasing fragility include climate-change impacts, weak governance and conflict, all of which are linked to the retreat from multilateralism and loss of faith in a rules-based global order.16 Getty images, Unsplash Global Risks Report 2026 29