Jonathan Wood

Control Risks

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Managing strategic surprise on the anniversary of the conflict in Ukraine (Control Risks)

After a year of brutal fighting, the conflict in Ukraine is once again escalating. Armed with Iranian drones, Russia is massing its forces for a renewed offensive in the east. The US and Europe, meanwhile, are shipping tanks and other armored vehicles to help Ukrainian forces defend and retake territory.

Nonetheless, decisive military action is unlikely in the coming months and there is no real prospect of negotiations – only adaptation to a fractured battlefield and fragmenting world order.

One strategic surprise of the last year has been Western unity and solidarity with Ukraine. Unprecedented economic sanctions against Russia (and Belarus) are holding – and even expanding with the G7’s experimental price cap mechanisms.

Europe swiftly and, so far, smoothly has accepted millions of Ukrainian refugees and launched Ukraine’s EU accession process. NATO countries are circuitously, but reliably, training and arming Ukrainian troops, while Finland and Sweden are joining the club. There will be further disputes over strategy and timing, but Western unity is broadly likely to hold in 2023, inspired by Ukraine’s stout defence of its territory.

A second surprise was the speed and substance of Europe’s energy decoupling from Russia. Energy disruption risks remain, but determination (infrastructure investment, market interventions) and luck (mild weather) got Europe through its energy crunch in 2022.

As a result, Russia’s share of EU energy imports is falling: from 25% before the conflict to 15% by late 2022 and certainly further in 2023 as fuel import embargoes take effect. Global energy markets generally are being reshaped by European liquefied natural gas (LNG) demand, Japan’s nuclear power restarts, India and China’s thirst for cheap Russian crude, and accelerating energy transitions.

As a result, our clients now carefully assess energy security and reliability as part of their market entry plans and overall business strategies.

Russia has so far been able to adapt to firm sanctions and the loss of key markets. Bumper energy revenues are sufficient to sustain its military operations, and growing trade linkages with Asia and Africa are rebuilding industrial supply chains.

Russia’s reliance on these new partners alone provides a check on nuclear escalation, which would likely prompt China, India and much of the so-called “global South” to cut ties. By the same turn, Russia’s resilience invites expansion and increased enforcement of sanctions in 2023, potentially against third countries. Corporate reputational and compliance challenges will not get any easier.

The conflict in Ukraine is driving geopolitical fragmentation. Governments believe they can no longer rely on current or future adversaries for critical goods and services, from fertiliser to semiconductors to data processing. National security considerations are taking over from the efficient allocation of capital in the design of international supply chains.

Inbound (and likely outbound) investments will face elevated scrutiny, especially in Western countries. The world economy will remain highly “globalised”, but the burden will increasingly be on companies to navigate increasingly complex, and potentially conflicting, political and regulatory requirements. 

About Jonathan Wood

Jonathan Wood is a Principal in Control Risks’ Global Risk Analysis practice, providing analysis and consultancy on political, operational, security and integrity risks to multinational organizations in the oil and gas, mining, insurance, financial services, retail, construction, and technology sectors.

About Control Risks

Control Risks is a specialist global risk consultancy that helps to create secure compliant and resilient organizations in an age of ever-changing risk. Working across disciplines, technologies and geographies, everything we do is based on our belief that taking risks is essential to our clients’ success.

We provide our clients with the insight to focus resources and ensure they are prepared to resolve the issues and crises that occur in any ambitious global organization. We go beyond problem-solving and provide the insights and intelligence needed to realize opportunities and grow. Visit us online at