Geopolitical risk has moved from the margins of investment analysis to its centre — and Toby Watson’s perspective on how to navigate it is grounded in decades of working across global financial markets.
For most of the post-Cold War era, geopolitics was a background consideration in investment decision-making — present but rarely decisive. That has changed. The fragmentation of the global order, the weaponisation of economic tools, and the increasing interdependence of political and financial risk have made geopolitical analysis a first-order concern for serious investors. Toby Watson, whose career required constant engagement with markets across multiple geographies and political environments, brings a practically grounded perspective to what that shift means for investment portfolios today.
Toby Watson is a Partner at Rampart Capital, an independent London-based investment office providing bespoke investment management and advisory services to wealthy individuals and families worldwide. Before joining Rampart Capital in 2020, Toby Watson spent nearly 17 years at Goldman Sachs, working across structured credit trading, principal funding, and global infrastructure financing — roles that required engagement with investment environments across Europe, North America, and Asia. That global perspective continues to inform how Toby Watson approaches investment decision-making today. He also served as Chairman of Excalibur Academies Trust from 2018 until early 2026.
Geopolitical Risk Is Changing How Serious Investors Think — Toby Watson’s Analytical Framework
Geopolitical risk is not new, but its character has changed significantly. The shift from a broadly rules-based international order to a more fragmented, multipolar world has introduced investment risks that standard analytical frameworks were not designed to capture. The seven points below draw on Toby Watson’s experience to explain how that shift is reshaping investment decision-making — and what investors need to do differently as a result.
Why has geopolitical risk become so much more prominent in investment analysis?
Geopolitical risk has always existed, but for much of the past three decades it was largely containable — localised in its effects and limited in its duration. What has changed is the scale and interconnectedness of geopolitical disruption. Toby Watson’s view, informed by years of working across global markets at Goldman Sachs, is that the current environment represents a structural shift rather than a temporary disruption — one that requires geopolitical analysis to be embedded in the investment process rather than treated as an occasional overlay.
1. Supply Chain Risk Has Become a Portfolio Risk
The reconfiguration of global supply chains — accelerated by the pandemic and deepened by geopolitical fragmentation — has direct implications for corporate profitability and sector-level returns. Companies that appeared well diversified geographically may have significant supply chain concentrations that were invisible until disruption forced them into view. Investors need to look through corporate structures to understand actual supply chain exposures, not just headline revenue and cost figures.
2. The Weaponisation of Economic Tools Changes Risk Profiles
Sanctions, export controls, investment restrictions, and technology transfer limits have become instruments of geopolitical competition in ways not anticipated in most investment frameworks. Assets or strategies that depend on frictionless cross-border flows now carry a layer of policy risk that needs to be explicitly assessed. Toby Watson considers this one of the most significant structural changes in the investment environment of the past decade — and one that standard portfolio analysis still tends to underweight.
3. Geographic Diversification Needs to Be Reassessed
Geographic diversification has long been a cornerstone of portfolio construction. But diversification across geographies that share common geopolitical risk exposures — through supply chain dependencies, regulatory alignment, or political alliance structures — may offer less protection than it appears. Genuine geographic diversification now requires understanding the geopolitical relationships between markets, not just their economic characteristics.
Rethinking What Geographic Diversification Actually Means
The experience Toby Watson developed at Goldman Sachs, working across markets in Europe, North America, and Asia, gave him a first-hand understanding of how differently the same geopolitical development can affect different markets. That insight shapes an approach to portfolio construction that looks at geopolitical risk factors explicitly rather than assuming geographic spread alone provides adequate protection.
4. Energy and Commodity Exposures Carry New Political Dimensions
Russia’s invasion of Ukraine in 2022 demonstrated how quickly geopolitical events can disrupt commodity and energy markets with lasting effects. Energy security has moved from a policy concern to an investment consideration — affecting the costs and competitive positions of energy-intensive industries and the long-term outlook for energy transition investments. Toby Watson considers energy exposure one of the most geopolitically sensitive dimensions of any international portfolio today.
5. Currency Risk Has a Growing Geopolitical Component
The use of currency mechanisms as tools of geopolitical pressure, the increasing divergence of monetary policy across major blocs, and the questions being raised about the long-term primacy of the US dollar all add dimensions of currency risk that go beyond standard macroeconomic analysis. Managing that risk requires explicit attention to geopolitical dynamics as part of currency exposure assessment — something that Toby Watson considers increasingly important in the current environment.
6. Scenario Planning Has Replaced Point Forecasting
One of the practical implications of greater geopolitical uncertainty is that point forecasting has become less useful as a basis for investment decision-making. Toby Watson’s approach emphasises scenario planning over forecasting: identifying the major geopolitical forces at work, assessing their implications across a range of outcomes, and building portfolios resilient enough to perform adequately across that range. The key elements of that approach include:
- Identifying the two or three geopolitical forces most likely to affect portfolio returns over the relevant time horizon
- Assessing the portfolio’s exposure to each of those forces across both direct and indirect channels
- Stress-testing against scenarios in which current geopolitical tensions escalate significantly
- Maintaining sufficient flexibility in portfolio positioning to allow for adjustment as the environment evolves
7. Resilience Has Become as Important as Return Optimisation
Perhaps the most fundamental way geopolitical risk is reshaping investment decision-making is by elevating the importance of resilience relative to return optimisation. A portfolio optimised for a single scenario is more vulnerable to geopolitical disruption than one designed to hold together across a range of plausible outcomes. For Toby Watson, building that resilience is not a constraint on good investing, but an integral part of it — and one the current geopolitical environment makes more important than at any point in recent decades.
