On October 29, 2025, Warren Ovadia, a master’s candidate researching geopolitical risk, sat down with Gregg Roman, executive director of the Middle East Forum, to discuss how multinational corporations identify and respond to geopolitical threats. Their conversation focused on the Maersk shipping company and the broader implications of the Houthi attacks in the Red Sea for global value chains.
Warren Ovadia: How would you define geopolitical risk in today’s global economy?
Gregg Roman: Geopolitical risk emerges from what I call the “business side of politics.” The risk tolerance of any given firm is directly attuned to the geopolitical situation in its areas of operation. It’s crucial to understand that some firms thrive on crisis, while others avoid it. The key skill is the ability to communicate political, security, and military risk in financial terms.
In the context of the Maersk situation, you see an intersection of maritime insurers, the shipping companies, their crews, and shipping unions. They must all be able to effectively price military and political risk. The derivative of that process includes structured products, hedging strategies, and innovative insurance solutions that are triggered by specific geopolitical events. On the one hand, you have tools like sanctions and threat matrices to lower temperatures; on the other, you have a business decision to either leverage a risky situation or exit a market entirely.
Warren Ovadia: Have you observed a change in the severity or frequency of these risks in recent years?
Gregg Roman: Absolutely. In the last 10 months alone, uncertainty has been amplified by the Trump administration’s trade policies, the use of military force to alter geopolitical conditions in places like Yemen and Venezuela, and the reclassification of transnational drug cartels as narco-terrorists. When you pair this with existing crises in Ukraine, Gaza, Iran, and ongoing civil wars in Africa, there is no shortage of global conflict for businesses to consider.
Today, with the proliferation of information on social media, global politics has become intensely polarized.
This environment has given rise to a new class of firms willing to operate in conflict zones. However, businesses now face new sensitivities, particularly the rise of identity politics. It used to be that a company entering a new market primarily worried about security—civil wars, terrorism, domestic instability, or corruption. Today, with the proliferation of information on social media, global politics has become intensely polarized. If a company isn’t able to deftly navigate the local political climate—which can shift rapidly—it risks consumer boycotts or becoming a target for politicians, creating significant barriers to market entry.
Warren Ovadia: When do you think firms like Maersk started treating geopolitics as a core strategic factor?
Gregg Roman: The turning point in the 21st century for a company like Maersk was the return of regional piracy in the Horn of Africa, specifically involving Somali pirates. The increased maritime threat environment, with pirates hijacking vessels, created a chain reaction affecting global shipping, international navies, insurance providers, and local governments. This was the first major challenge that directly affected their risk tolerance and forced them to fundamentally change shipping routes to avoid piracy. While factors like weather, port access, and corruption have always been considerations, the dramatic increase in organized piracy over the past 25 years—first with Somalia and now with the Houthis—elevated geopolitics to a central strategic concern.
Warren Ovadia: Can businesses truly anticipate these shocks, and are theoretical frameworks for risk mitigation effective?
Gregg Roman: Yes, they can anticipate these shocks, particularly if they work with political risk advisory firms and think tanks like mine. There is a robust early warning system in place today, from industry publications to security updates from bodies like the British Maritime Shippers Association. A responsible company should have alternative plans to reduce its risk profile, such as rerouting from the Suez Canal around the Cape of Good Hope if necessary.
Theoretical models can be effective, but only if their equations account for outlier events and multiple inputs. A simple binary model—“Will there be Houthi attacks or not?”—is insufficient. A sophisticated model must incorporate a character analysis with as many inputs as possible: If Israel hits Iran, will Houthi attacks increase? If there’s a ceasefire in Gaza, will they stop? The framework must have built-in flexibility for unforeseen events. When a company’s modeling is robust and shared with insurers and shareholders, its operations become safer, both physically and from market shocks.
Warren Ovadia: How can partnerships with think tanks strengthen a company’s ability to sense and respond to risk?
Gregg Roman: There are four primary ways. The first is risk assessment, where a company partners with policy bodies or trade associations that act as an early warning system to detect geopolitical anomalies. The second is risk mitigation, which involves partnering with governments and other organizations to encourage responsible public and security policies that create more stable market conditions. For example, Maersk could participate in a forum to petition European navies to conduct freedom of navigation patrols in the Red Sea to deter the Houthis.
Once a threat materializes, the company becomes an advocate for government intervention to reduce that risk, using think tanks as interlocutors to explain the economic consequences of inaction to policymakers.
The third is risk deconfliction. Once a threat materializes, the company becomes an advocate for government intervention to reduce that risk, using think tanks as interlocutors to explain the economic consequences of inaction to policymakers. Finally, there is risk management. If the geopolitical risk becomes too high, the company may decide to exit a market completely and use public affairs firms or policy organizations to explain and justify its decision based on overwhelming business and security considerations.
Warren Ovadia: To what extent are the Houthi attacks a proxy instrument within broader regional rivalries?
Gregg Roman: The Houthis are an instrument of the Iranian Shia axis, but this is a relatively recent development. Historically, the Houthis are Zaydi Muslims from northwest Yemen who were often in conflict with the country’s Sunni population. Iran began stepping in around 2012-2013, supplying them with strategic weapons like missiles and drones. The first stage of their aggression was directed at the United Arab Emirates and Saudi Arabia; the second was interfering with maritime traffic; and the third, and most successful, has been their effort to shut down shipping through the Bab al-Mandab strait.
This was all done with Iran’s encouragement to pressure Israel and the West. However, the Houthis have developed a degree of autonomy through their success. Their egos have grown, and they now seem positioned to extract concessions directly from the West for the status of Yemen, rather than acting merely as a tool of Iran. It’s a case of Frankenstein’s monster; they have grown beyond what their creators in Tehran intended and have now become a monster of Iran’s own making. They are still allies, but their policy is now driven by what is best for the Houthis, not just what is best for Iran.
Warren Ovadia: Maersk’s revenues rose significantly in 2024 despite the crisis. How would you assess their response?
Gregg Roman: They adapted and overcame, plain and simple. They had a plan B, which was to reroute cargo deliveries around Africa via the Cape of Good Hope. However, this adaptation came at a cost to the consumer, who ultimately paid for higher shipping costs. In general, companies in this situation have three options: stop servicing the affected ports, which happened with Israel’s Eilat port; reroute their cargo, as Maersk did; or engage in bribery and corruption to pay off the attackers, as the Chinese have done with the Houthis.
Warren Ovadia: What lasting lessons should global firms draw from this crisis?
Gregg Roman: The primary lesson is that all firms must invest in business continuity and crisis planning. They cannot simply expect business to operate as normal, because no one can predict the next revolution, terror attack, or market-disrupting event. The companies best suited to handle a crisis like the Red Sea attacks are those with the flexibility to adjust their practices, backed by rigorous planning done before a catastrophic event occurs. Firms that invest in preparing for unlikely events are far better positioned than those that do not.
The long-term survivability of a company depends on operating at maximum efficiency today while simultaneously preparing for the risks of tomorrow.
This crisis also revealed how a small, rag-tag group of non-state actors can disrupt over 12 percent of the global economy. It simultaneously exposed the unwillingness of major powers to robustly defend international waterways. The response to the Houthis has not been particularly effective. The only long-term solution is to eliminate the Houthi threat entirely, as they are not interested in diplomacy.
Warren Ovadia: Finally, do you think this crisis marks a lasting realignment of global trade routes?
Gregg Roman: It is a temporary shock, but one that will recur until the next round. However, it has accelerated the development of a strategic land corridor known as the India-Middle East-Europe Corridor, or IMEC. This route, which uses a combination of sea and rail links to connect India to Greece via the United Arab Emirates, Saudi Arabia, and Israel, is a direct alternative to the Suez Canal. In the long run, IMEC could challenge Maersk’s business model by taking away the threat from the Red Sea and also countering China’s Belt and Road Initiative. The pursuit of resilience is not at odds with efficiency; the long-term survivability of a company depends on operating at maximum efficiency today while simultaneously preparing for the risks of tomorrow.
