What has actually happened?
Israel and the U.S. launched joint "preemptive" strikes against Iran on 28 February, killing Supreme Leader Ayatollah Ali Khamenei and numerous other senior leadership figures, with the strikes intended to remove Iranian military threats following weeks of failed negotiations aimed at curbing Iran's nuclear program.
Israeli strikes reportedly centered on political targets while the U.S. focused on military capabilities, with Israeli Prime Minister Benjamin Netanyahu and U.S. President Donald Trump calling for regime change in the country. Sustained military action has been conducted since the strikes began, including actions that have impacted other countries in the surrounding area, such as Bahrain, Kuwait, Jordan, Lebanon, Qatar and the UAE.
In this scenario, what is often underestimated?
The increasingly complex conflict dynamics include asymmetric retaliation, strategic outcomes beyond military/defense victories, the effect on the safety and security of the wider region, economic impacts and internal political resiliency. All of these areas can have a significant influence on deterrence, crisis management and post-conflict stabilization efforts across the region, including for businesses operating there.
Beyond the immediate conflict zone, there is also a heightened threat of unrest and terrorism; conflict-related protests have been reported in every region, with the Middle East a hotspot for violent unrest, as evidenced by incidents in Iraq and Pakistan, and European/North American hotspots for anti-war activism, impacting businesses and their personnel globally.
What industries are most exposed?
Industries in the region most exposed to kinetic threats include Critical National Infrastructure (CNI), Transport and Logistics (primarily Aviation and Maritime), Energy (primarily Oil and Gas) and the Defense sector.
Industries most exposed to secondary threats across the broader region and globally include Manufacturing, Logistics, Finance and Insurance, Technology and Travel and Tourism.
Multi-sector impacts pose material security, operational and economic disruption; an increasing number of organizations have invoked crisis and incident management strategies, employing increased security and contingency measures. Transportation across the region is materially disrupted, impacting travel and supply chains, with a heightened threat ofutilities and telecommunications disruption.
What signals should those leadership teams track in the next 14 days?
The conflict is assessed to continue until one side achieves its objectives, with Israel and the U.S. having the capability to continue strikes for at least the next 7-10 days, potentially longer if the rate of strikes decreases/resupply is effective.
Israel has extended its state of emergency until 12 March, and Trump has stated the operation could last 4-5 weeks. Key areas to keep in view in the immediate term are:
- Military escalation signals, such as sudden forcedeployments, expanded target sets, higher strike tempo or proxy activity, all of which are likely to indicate a widening/intensification of the conflict.
- Energy and shipping disruptions, including via heightened threats or incidents around key strategic areas like the Strait of Hormuz and attacks on energy infrastructure.
- Changes to diplomatic posturing, such as an increase in embassy evacuations and travel warnings/advisories, which are highly likely to be indicative of a declining security environment.
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