Cross‑border risk & new international realities
‘The past is no longer a safe predictor of anything’.
Global risk has become increasingly interconnected and highly turbulent. Guests in 2025 described a financial system shaped by geopolitical tension, regulatory divergence and uneven economic trajectories - and sadly it seems unlikely that much will change as we move into a new quarter. International complexities have rarely been more difficult to predict.
‘The world isn’t giving us neat problems anymore’.
Sector overview
Across our 2025 discussions, one theme resonated strongly with those operating in banking and internationally exposed financial services: the world has become more interconnected, more volatile, and more difficult to predict. The traditional assumptions that underpinned global financial stability- coordinated regulation, predictable monetary policy, and relatively stable geopolitical relationships - have weakened. As we look ahead to 2026, boards are grappling with a new reality: global risk is no longer cyclical, but part of the everyday, every day.
Throughout the year, attendees to our Forums described the challenge of navigating a financial system shaped by competing regulatory regimes, divergent economic trajectories, and increasingly assertive geopolitical actors. For UK‑based banks with international operations, this complexity is amplified. They must manage the interplay between domestic expectations and global exposures, all while maintaining resilience in the face of shifting capital flows, currency volatility and evolving sanctions landscapes.
One participant captured the mood when they said 'the world isn’t giving us neat problems anymore.' Something that applies acutely to banking! Interest rate cycles are no longer synchronised, inflationary pressures differ across regions, and political risk is rising in markets once considered stable. As the regulatory rulebook continues to expand, particularly in areas such as operational resilience, financial crime, and digital assets, it seems like there is no end to the 'to do list'.
Another recurring theme across our Forums was the growing tension between global ambition and local accountability. Boards must ensure that international strategies are grounded in a deep understanding of local risk environments, cultural nuances and supervisory expectations.
Yet they must also maintain a coherent global risk appetite and a consistent approach to governance... a balance which is becoming harder to achieve. As one attendee noted 'it’s not the rules that catch us out, it’s the differences between them.' Fluency - in local markets, in regulatory nuance, in geopolitical dynamics - is becoming critical.
We also heard concerns about the increasing 'weaponisation' of financial systems. Sanctions, export controls and financial crime expectations are now central to geopolitical strategy. Banks are expected to act not only as commercial institutions but as instruments of national policy. This places enormous pressure on compliance teams, who must interpret rapidly evolving rules while ensuring that legitimate customers are not inadvertently excluded, or used as pawns in an increasingly incredulous political game. The risk is significant, and was a topic of major debate. As one participant put it, 'one wrong call can close a market overnight.'
Another insight that surfaced repeatedly was the fragility of global supply chains and the implications for credit risk. Banks are being forced to reassess counterparty exposures and the resilience of borrowers operating in disrupted markets. Climate‑related risks are also becoming more geographically uneven, with acute weather events and transition pressures affecting regions differently. Boards must ensure that their risk models reflect these realities, rather than relying on historical assumptions that no longer hold. One guest sagely noted that 'the past is no longer a safe predictor of anything'. How very true!
‘It’s not the rules that catch us out,
it’s the differences between them’.
Looking ahead
Looking ahead to 2026, our guests outlined three key predictions they believe will shape the international banking landscape, and if the past year has taught us anything, it’s to expect the unexpected. After all, who could have predicted the sudden escalation between the US and Iran, or the speed at which it sent shockwaves through global markets? It was a stark reminder that geopolitical risk doesn’t politely queue up and wait its turn. If they haven’t already, Boards will need to invest seriously in geopolitical intelligence and ensure strategic decisions reflect a far more nuanced understanding of global dynamics, however tricky, uncomfortable or fast‑moving they may be.
Technology, unsurprisingly, isn’t planning to slow down either. AI‑driven financial crime, cross‑border cyber threats and digital‑first competitors are reshaping competitive dynamics at pace. Yet for all the headaches, technology continues to offer huge opportunities. Undeniably enhanced risk analytics, real‑time monitoring and more sophisticated scenario modelling are becoming essential tools rather than nice‑to‑haves, such is the speed of development.
The challenge for boards is to harness these tools without becoming overly reliant on them before they are good enough to trust... As one participant neatly put it, 'technology moves faster than our governance ever will - unless we change how we govern'.
And just when many thought ESG might quietly fade into the background (particularly given the US administration’s best efforts to bury it, alongside DE&I) it has come roaring back onto the agenda for many UK firms. Add to that the fact that Basel 3.1 is now set to go live in January 2027... there's plenty of differentiators across the global markets, leading to heightened risks. Boards will need far more sophisticated coordination across jurisdictions, and the pressure to demonstrate resilience - financial, operational and cultural - will undoubtedly intensify.