The Global Risks Alliance (GRA)
Sovereign investors hold assets across borders, and states increasingly screen, restrict or sanction cross-border capital. Investment screening, sanctions, export controls and asset freezes can block a transaction, trap an investment or immobilise official assets. This page sets out how geopolitical risk reaches sovereign portfolios and reserves, how exposure can be mapped by jurisdiction, custodian, currency and legal system, and which institutions decide how to respond when restrictions change.
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Geopolitical investment risk is the risk that cross-border holdings of state investors are blocked, trapped or devalued by investment screening, sanctions, export controls or asset freezes. States increasingly screen and restrict foreign capital, so custody location, issuer jurisdiction and reserve currency choices carry risk in themselves.
The working screen behind this subject: its structure, terms and states. Names are placeholders and values illustrative.
Geopolitical investment risk · Sovereign fund S · Year 4
| Withdrawal | 3 pct of fund | 3.1 pct | Within |
| Liquidity tranche | 6 months imports | 6 months | Below |
| Domestic share | 6 pct max | 8 pct | Within |
Cross-border exposure and restrictions. The dossier below sets out how the risk develops, what is measured, where the data come from, how it is modelled and who decides.
Many host countries review foreign investment on national security grounds, often with closer scrutiny of state-owned investors. Reviews add time, conditions or prohibition, and the sectors treated as sensitive have widened to data, technology and infrastructure.
Sanctions can freeze assets held in a jurisdiction, through its custodians or in its currency. For official holders this risk sits in the legal and payment infrastructure rather than in the market price of the asset.
Restrictions on trade, technology and capital can split markets into blocs. Returns, correlations and liquidity estimated on integrated markets may not hold, and some holdings become hard to sell or repatriate.
Measures against one state's investors invite counter-measures against others. A sovereign investor can be caught in disputes it is not party to, through its home state's alliances or through its co-investors.
Each term as this page uses it. Where a standard-setting body defines the term, the wording follows that body.
| Term | Definition |
|---|---|
| Investment screening | Government review of foreign investments on security or public order grounds. |
| Asset immobilisation | Freezing a state's assets so they cannot be moved or used, typically under sanctions. |
| Custody | The safekeeping of securities by a financial institution, in a particular legal jurisdiction. |
Each indicator carries its unit, its cadence, the kind of source behind it and the evidence label a value would carry. No values are shown: a programme supplies them under its own authority.
| Indicator | Unit | Cadence | Source type | Label |
|---|---|---|---|---|
| Portfolio by jurisdiction of custody and of issuer | percent of assets | annual | Fund and reserve manager disclosures | REPORTED |
| Currency composition of official reserves | percent of allocated reserves | quarterly | IMF COFER | OFFICIAL |
| FDI regulatory restrictiveness | index from open to closed | annual | OECD FDI Regulatory Restrictiveness Index | OFFICIAL |
| Investment screening reviews and outcomes | count by outcome | annual | Screening authority annual reports | OFFICIAL |
| Geopolitical risk index | index | monthly | Text-based measure from news coverage | ESTIMATED |
| Holdings linked to sanctioned or restricted entities | percent of assets | on change | Holdings matched to official sanctions lists | ESTIMATED |
| New investment policy measures restricting foreign investment | count per year | annual | UNCTAD Investment Policy Monitor | REPORTED |
The topic as a computational graph: named sources feed the methods, an evidence review gates the outputs, and the decisions stay with the authorities that hold them.
Fig. 02Nodes carry their type, two metric rows and a state; connectors show what feeds what; dashed frames name the owners; the timeline is the cadence. Design of the pipeline, not a record of a run.
Named public datasets and institutional records, each with its licence class. Sources by agreement are used only under their terms and never republished.
| Source | What it gives | Licence class |
|---|---|---|
| IMF Currency Composition of Official Foreign Exchange Reserves | Aggregated currency composition of reported official reserves | Free, IMF terms of use |
| OECD FDI Regulatory Restrictiveness Index | Statutory restrictions on foreign direct investment by sector and country | Free, OECD terms |
| UNCTAD Investment Policy Monitor and World Investment Report | National investment policy measures, including screening regimes | Free, United Nations terms |
| Official consolidated sanctions lists | UN Security Council, EU, UK and US lists of designated persons and entities | Public, official records |
| National investment screening authority reports | Notifications, reviews, conditions and prohibitions, such as CFIUS annual reports and EU screening reports | Public, official records |
| Geopolitical Risk Index by Caldara and Iacoviello | Monthly measure of adverse geopolitical events and threats from newspaper text | Free, authors' terms |
| IMF Coordinated Direct Investment Survey | Inward and outward direct investment positions by counterpart economy | Free, IMF terms of use |
Sovereign Capital Nexus prepares evidence. The decisions below are taken by the authorities named, under their own rules, and never by the platform.
| Who decides | The question | Evidence this page serves |
|---|---|---|
| Fund boards and reserve managers | How to diversify custody, currency and jurisdiction exposure within the mandate | Exposure maps, restriction scenarios, liquidity assessments |
| Finance and foreign ministries | How the state's investors engage with host country screening, and how to respond to measures against them | Screening regime comparisons, review histories, available legal channels |
| Central banks | How the currency and custodial structure of reserves balances liquidity, return and legal risk | Reserve composition, custody concentration, restriction scenarios |
| Host country screening authorities | Whether a transaction by a state investor raises national security concerns | Investor governance, ownership and disclosure records |
Many countries have strengthened screening of foreign investment in sensitive sectors such as critical infrastructure, technology, data and defence. Investments by state-owned or state-linked investors often receive particular scrutiny. At the same time, sanctions have shown that sovereign assets held abroad can be frozen, affecting how states think about where to hold reserves and investments.
For long-horizon investors, geopolitical fragmentation raises questions about diversification, market access and the reliability of legal protections. Sovereign investors respond through transparency, commercial governance and diversification. Host countries seek to balance the benefits of long-term capital with national security concerns. Reciprocity has also become a theme: states increasingly weigh how their own investors are treated abroad when setting rules for foreign state investors at home, and bilateral investment treaties and their dispute settlement provisions shape the legal protection available to cross-border holdings.
Tracking investment screening regimes and their application to state investors.
Assessing portfolio exposure to geopolitical scenarios, using decision analysis under uncertainty.
Exploring how fragmentation or conflict could affect cross-border holdings.
Geopolitical events are hard to anticipate, screening decisions are often confidential, and portfolio data is limited.
The current service level is R0: information and enquiries. An enquiry receives a reference and names the next step; applications, payments, compute allocations and registrations open only when their team, terms and review capacity exist.