How do international tensions impact organisations, their employees and their reward strategies in 2025?

 

Rising geopolitical pressures are shaping the way organisations operate, affecting everything from supply chains and sales to reward and benefits strategies. Given all the uncertainty, flexibility is a must.

Franck Baron, group deputy director at health and security risk management firm International SOS, says: “It’s a fragmenting world politically and socially. The conflicts in the Middle East and between Russia and Ukraine have increased risk around the world. It’s a challenge for organisations to cope in this state of permacrisis.”

Risk monitor

Plenty of potential issues are on the geopolitical risk radar. As well as regional problems such as more organised crime in South America and uncertainty around the future for Syria, there are global challenges to consider, says Stéphan Malvoisin, senior vice president, partnerships US at international crisis and risk management firm Crisis24. “Climate change is an issue, with the LA wildfires a recent example, but neither can we eliminate another public health crisis or pandemic,” he explains. “Artificial intelligence also has the potential to be a major issue for businesses.”

The re-election of US president Donald Trump also casts a long shadow over the world. Talk of tariffs, and the way other countries might react, has the potential to push up prices and affect supply chains and sales globally.

The results of Healix’s Risk radar 2025, which surveyed 500 risk and security managers in September 2024, supports this, with political instability overtaking extreme weather as the top concern for businesses. Andrew Devereux, global risk intelligence manager at Healix, says: “People are nervous. It’s difficult to operate through uncertainty.”

Reward response

These geopolitical pressures also have the potential to affect reward, pushing up costs and, in some cases, even putting benefits out of reach. Employers, therefore, need to ensure their approach allows for flexibility and adaptability, says Linda Beavis, global leader for mobility, global benefits at Aon.

As an example, she points to a situation where a country’s economy is severely affected, pushing up the cost of medical treatment and restricting access. “This can have an impact on employees’ health and wellbeing so employers need to ensure they are providing the best level of support possible,” she explains. “This could be through telemedicine and virtual services which can support access to treatment.”

Employers are also taking proactive steps to ensure that, should something happen, benefits are secure. This is happening with pension plans, says Valentina Rocchi, senior international benefits director at Willis Towers Watson (WTW). “We’ve seen an increase in the implementation of international pension plans for locals, especially in difficult markets such as Ukraine, Argentina and Lebanon,” she explains. ”This gives employees the reassurance to save, even if the government defaults.”

Health security

Global uncertainty means that health and wellbeing benefits are a key part of the reward package. Joe Thomas, managing director of health insurance provider April International UK, has seen demand for cover for international employees increase. “Cover has evolved too,” he adds. “It now includes expanded crisis response services; 24/7 access to telehealth; and comprehensive risk assessments.”

Mental health support is also important. As well as being rolled out on a stand-alone basis, this is a standard benefit on most international medical plans, says Thomas. “Employers are seeking out culturally sensitive resources but also prioritising preventative measures such as resilience training and mindfulness in recognition of the critical role mental health plays in employee wellbeing,” he says.

The threat of unrest means there is more scrutiny of the terms and conditions across health and risk products. This has seen organisations with employees in risk zones making sure that any exclusions for war are lifted.

Pay pressures

Pay is also being shaped by geopolitical pressures. Tariffs, such as those proposed by Trump, can push up prices, leaving employees struggling to meet living costs. In extreme cases, a government may even devalue the currency, for instance Argentina’s move to weaken the value of the peso by more than 50% in 2023.

Pay policies must, therefore, recognise the possibility of international tensions having an inflationary effect, says Tom Hellier, senior director, rewards at WTW. “Organisations need a policy that allows for an increase in both the frequency of review and the frequency of change in pay,” he explains. ”This helps to ensure that pay keeps pace with purchasing power.”

Heightened risk will also affect pay for those on overseas assignments. Rameez Kaleem, founder and managing director at pay and reward consultancy 3R Strategy, expects to see hardship allowances increase where risk is higher. “Employers need to factor in the cost of living in different countries but also be prepared to pay more if someone is going somewhere there’s conflict or tension,” he says. “This need for a higher overall package may mean fewer international assignments as organisations look to local people to cover the role.”

Travel preparations

Where travel plans do get the green light, organisations are taking additional steps to ensure employees are protected. As well as putting in place medical and security support while they are overseas, employers are investing in pre-travel briefings and training to ensure employees are prepared, whatever happens.

These are tailored to the employee and the destination, covering external risks, such as any political, environmental, and cultural issues, plus any risks specific to the individual, such as health, gender, and sexual orientation. Dr Luke Kane, medical officer at Healix, explains: “It’s tailored to the employee. It might flag up the need to stick with reputable travel providers in rural Zambia; caution an employee with asthma about a trip to Delhi; or run through medication ahead of a trip to Japan, where even some prescription drugs are illegal.”

While these preparations make sense for risky destinations, it is essential wherever an employee is travelling. says Baron. “A problem can happen anywhere,” he explains. “We see cases where an employee goes to a plain vanilla destination and there’s an incident and they end up in trouble as they try to manage on their own. As a minimum, employees should be made aware of the assistance provider’s app and phone number and the importance of using them if anything happens.”

Assignment support

Assistance providers can also support an employee while they are away. Common features include push notifications for any emerging risks, such as a tsunami or earthquake warning, and check-in or tracking facilities to ensure employees are safe.

Evacuation and repatriation services are another standard part of the package. This is available through the assistance providers although most international medical insurance policies will also provide it if an employee has a health emergency. Nicola Banwell, senior consultant, vice president – global mobility, at Lockton, recommends checking what is available. “Medical evacuation and repatriation services can sometimes be optional on international medical schemes,” she says. “Additionally, where an organisation has a workforce in a high-risk territory, it might take out standalone arrangements with an assistance provider for the additional services, including crisis response and security evacuation.”

With geopolitical risks ramping up, having the right policies and protection in place will help to keep employees safe and motivated. Ensuring the approach is flexible will make it easier to adapt, whatever 2025 brings.