Trade rules, sanctions, cyber escalation, supply availability and financing conditions are shifting faster than annual planning cycles. As a result, geopolitical risk in 2026 is an operational constraint that changes how Canadian organizations procure, contract, secure systems, move data across borders and access capital.
Aliya Daya, Senior Client Executive, Commercial Insurance, has been tracking geopolitical trends since her first article on the topic in 2024. With more than 25 years’ experience advising businesses on insurance and risk management, Aliya outlines why geopolitics now must be treated as embedded business risk.
Note: This is part one of a three-part series on how to manage geopolitical risk in 2026.
In my November 2024 piece, I framed geopolitical risk as a fast-rising external pressure; one that Canadian businesses needed to take seriously as the global trade, security and diplomatic environment shifted. At the time, the conversation (for many organizations) still lived largely in the “strategic” bucket: important, watch closely, scenario-plan, but often not fully integrated into day-to-day enterprise decision-making.
It’s 2026 — and how the world has changed. The Canadian reality has tightened and not in a theoretical way. Geopolitics has moved from “macro context” to operational constraint. It now shows up inside:
- procurement decisions
- contract language
- cybersecurity posture
- cross-border data decisions
- financing conditions
- board governance expectations
The World Economic Forum’s Global Risks framing reinforces this direction: geopolitical and geoeconomic confrontation increasingly behaves as a systemic driver that interconnects economic, technological, societal and security risks rather than sitting in isolation.
This article sets the foundation for a three-part series by answering one question: why must Canadian organizations reclassify geopolitics as a core operating variable (not a peripheral strategic consideration)?
Reclassifying geopolitical risks in 2026: From strategy to operations
Historically, geopolitical risk was treated as a macro-strategic overlay, relevant to foreign expansion decisions, foreign direct investment or crisis response planning, but largely disconnected from day-to-day enterprise risk management (ERM). That classification no longer holds.
What has changed is not merely “more instability.” It’s that geopolitics now behaves like a systemic risk amplifier, increasing correlation between risk categories that used to be modeled independently (supply chain vs. cyber, regulatory vs. financial, contracts vs. operational continuity). The World Economic Forum captures this directly through its framing of structural forces and interlinked risks across time horizons.
For Canadian organizations, this reclassification shows up in measurable, operational ways:
- Volatility in input pricing and availability, especially where supply is concentrated, route-dependent or politically sensitive.
- Higher frequency of regulatory and trade policy change, including sudden enforcement shifts.
- Elevated cyber threat activity, aligned with geopolitical objectives, not just criminal profit.
- Contractual uncertainty, sanctions clauses, export controls, force majeure disputes, payment disruptions.
- Greater scrutiny of capital sources, ownership structures and counterparties, especially for critical sectors and sensitive technologies.
In other words: geopolitics now directly influences loss frequency, loss severity and tail-risk exposure across multiple risk categories because it changes the rules of performance, payment and access.
Why strategic competition defines 2026 business risk
The defining geopolitical feature of 2026 is not generalized instability, but strategic competition between major power blocs.
Unlike prior eras of globalization, this competition is not limited to trade volumes or military posture. It extends into the operational mechanics of business:
- industrial policy and subsidies (who gets to build what, and where)
- export controls and technology restrictions
- investment screening and ownership limitations
- data localization and digital sovereignty
- critical minerals, energy security and infrastructure control
The International Monetary Fund (IMF) describes the rise of geopolitical factors shaping economic conditions and cross-border flows, while the Organization for Economic Co-operation and Development (OECD) highlights geopolitical risk as a driver of trade and investment uncertainty and resilience considerations.
Key implication (and it’s uncomfortable, but useful): strategic efficiency is increasingly subordinate to political reliability.
The “best” supplier, route, jurisdiction or customer is not only the one with the best economics, it’s the one that remains viable under shifting policy and alignment conditions.
For Canadian businesses — particularly in manufacturing, energy, mining, transportation and technology — this creates structural exposure, not episodic risk.
If your margins, timelines or service delivery depend on a narrow set of jurisdictions, routes or restricted technologies, geopolitics is already in your operating model (whether you’ve admitted it in ERM or not).
How geopolitics has changed cyber risks for business
One of the most consequential developments since 2024 is the formal convergence of cyber risk and geopolitical strategy.
The National Cyber Threat Assessment 2025–2026 confirms that state-aligned cyber activity targeting Canadian organizations is increasing in both sophistication and strategic intent. These operations are not purely criminal; they are often aligned with broader geopolitical objectives, including economic disruption, intelligence gathering and strategic influence.
The key point for risk leaders is that cyber incidents should not be modeled purely as opportunistic crime. In a geopolitically tense environment, cyber can be used for strategic disruption, intelligence collection and influence and the private sector is often where those objectives land first.
From a risk perspective, this changes three things:
Threat motivation shifts from opportunistic to strategic (persistence and targeting improve).
Attack timing correlates with geopolitical events (escalations, sanctions, elections, diplomatic flashpoints).
Impact scope expands beyond financial loss to include regulatory, reputational, operational, and national-security implications.
The Allianz Risk Barometer 2026 reinforces this shift, ranking cyber incidents as the leading global business risk (for the fifth year in a row with its highest score ever — 42% of responses) while explicitly linking escalation to geopolitical tension.
And Canada’s cyber guidance also notes that geopolitical events can drive fluctuations in cybercrime activity — useful confirmation that “geopolitical correlation” isn’t just a theory.
For Canadian organizations, cyber risk now needs to be modeled as:
- A systemic enterprise risk (not an IT-only risk).
- A potentially state-linked exposure (even when the initial entry looks “criminal”).
- A board-level governance issue (consequences increasingly span operations, finance, legal and reputation).
Cybersecurity is no longer just defensive posture; it is part of geopolitical risk posture.
The geopolitical nature of modern supply chains
Global supply chains in 2026 are no longer optimized primarily for cost or speed. They are optimized (often imperfectly) for resilience under geopolitical stress.
Key structural changes include:
- Multi-jurisdiction sourcing strategies (to avoid single-point geopolitical failure).
- Politically informed supplier selection (viability under sanctions/export controls matters).
- Increased contractual complexity (substitution rights, termination triggers, compliance representations).
- Greater use of inventory buffers for strategic inputs (accepting carrying cost to reduce interruption risk).
The Bank of Canada explicitly notes elevated geopolitical uncertainty and highlights that escalation disrupting supply chains and commodity markets can raise inflation and slow activity, with markets potentially demanding higher risk premiums (raising borrowing costs and weakening confidence).
For Canadian firms in logistics, manufacturing, energy, hospitality, and food supply, the practical shift is this:
- Supply chain risk is now strategic, not merely operational.
- Persistent, not cyclical.
- Board-relevant, not back-office.
Supply chains should be understood as geopolitical systems, not just operational networks because the most consequential failure modes are now often political, regulatory, or security-driven.
Canada’s geopolitical position and business risk in 2026
Canada occupies a distinctive geopolitical position:
- Deep economic integration with the United States.
- Alignment with major allies and security partners (including NATO, the G7, and Five Eyes).
- Resource intensity in energy and critical minerals.
- Growing exposure in data-driven and professional services.
This positioning creates opportunity, but also downstream vulnerability. Canadian firms are frequently impacted by geopolitical decisions made by larger actors, particularly in trade, sanctions, technology restrictions and security policy.
The Bank of Canada reinforces the reality that Canada’s outlook carries unusually high risk when geopolitical uncertainty is elevated and North American trade dynamics are under review.
That is why geopolitical risk cannot be outsourced to government policy alone. It must be internalized within enterprise decision-making because the operating constraints show up inside your contracts, vendors, systems, customers, and financing.
Geopolitics as embedded business infrastructure
When I wrote about geopolitical risk in November 2024, the message was fundamentally a warning: the world was shifting and Canadian organizations needed to widen their aperture, especially around trade posture, regulatory volatility and security dynamics.
What’s changed since then is not that geopolitics has become more important, it’s that it has become more embedded. The risk is no longer primarily episodic, where businesses prepare for “events.”
Instead, geopolitical pressure increasingly arrives through mechanisms that can change the rules of performance overnight: sanctions and export controls, technology restrictions, data sovereignty expectations, supply-chain chokepoints and cyber activity that is increasingly aligned with strategic objectives.
For Canadian business leaders, the practical takeaway is straightforward: if geopolitics can alter your ability to operate, deliver, get paid, secure systems or access capital, then it belongs in governance, ERM, cyber strategy, supply-chain architecture and capital planning, not as a quarterly “geopolitical update,” but as a continuous operating assumption.
This is exactly why part 1 focuses on reclassification. In part two, we’ll translate this environment into practical scenario pathways and leading indicators for Canadian sectors.
And in part three, we focus on risk transfer. When geopolitics drives correlated disruption, insurance can’t be a once-a-year transaction — it has to be a layered risk transfer stack aligned to Canadian realities, with wording and triggers that won’t stall claims when the environment shifts. Done well, it turns insurance into strategic infrastructure.
FAQs
Geopolitical risk is the risk that political, security and cross-border policy dynamics change the rules your business depends on: who you can buy from, sell to, route through, insure, pay or host data with.
In 2026, it matters because geopolitics isn’t “macro context” anymore; it’s an operational constraint that shows up inside procurement, contracts, cybersecurity posture, trade compliance and financing conditions.
The practical shift is simple: when geopolitics can alter your ability to operate mid-quarter, it belongs in enterprise risk management, governance and day-to-day decision-making, not a quarterly update.
Canada’s geopolitical exposure is often downstream. Many Canadian firms aren’t “global” by branding, but they are global by dependency: deep U.S. integration, allied alignment (NATO/G7/Five Eyes), resource intensity (energy/critical minerals) and increasing exposure through data-driven services.
That means policy shifts made by larger actors (trade, sanctions, tech restrictions, security rules) can hit Canadian operations through contracts, suppliers, payments and compliance—even if you never open an overseas office.
Because it now changes loss frequency, loss severity and tail exposure through everyday mechanisms:
- supplier viability
- route disruption
- sanctions clauses
- export controls
- enforcement shifts
- payment friction
- cyber activity aligned to geopolitical objectives
Historically, geopolitics lived in the “watch closely” bucket, meaning it was important for expansion decisions and scenario planning, but disconnected from day-to-day enterprise risk management. That classification no longer holds.
In 2026, geopolitics behaves like a systemic risk amplifier, correlating risks that used to be modeled separately (supply chain vs. cyber, regulatory vs. financial, contracts vs. continuity).
Position and prepare as you would for any embedded operating condition: build decision readiness.
Start by recognizing where geopolitics already touches your business, such as vendors, routes, customers, jurisdictions and systems. Then treat it as a continuous operating assumption and integrate it into:
- governance
- enterprise risk management (ERM)
- cyber posture
- supply-chain architecture
- capital planning
The practical test is blunt: if geopolitics can change your ability to operate, deliver, get paid, secure systems or access capital, you need repeatable mechanisms.
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Aliya Daya, Senior Client Executive, specializes in risk management strategies and insurance solutions for the technology sector, as well as disruptive and emerging industries. With more than 25 years of experience in the insurance industry, Aliya serves as a Cyber Technical Specialist and National Mixed Practice Team Lead at Acera Insurance. She specializes in innovation, technology, cyber insurance and privacy breach, political risk, manufacturing / fabrication / wholesale / distribution, hospitality, non-profit and faith-based organizations.
You can reach Aliya at 403.717.5895 or aliya.daya@acera.ca
Related reading:
- Part 2: Managing geopolitical risks in 2026: Technical frameworks for Canadian organizations
- Part 3: Risk transfer strategy for Canadian businesses facing geopolitical risks
Information and services provided by Acera Insurance, Acera Benefits and any other tradename and/or subsidiary or affiliate of Acera Insurance Services Ltd. (“Acera”), should not be considered legal, tax, or financial advice. While we strive to provide accurate and up-to-date information, we recommend consulting a qualified financial planner, lawyer, accountant, tax advisor or other professional for advice specific to your situation. Tax, employment, pension, disability and investment laws and regulations vary by jurisdiction and are subject to change. Acera is not responsible for any decisions made based on the information provided.
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