Chokepoint Shock Maps: Firm-Level Portfolio Stress for Geoeconomic Risk

Events such as sanctions, export controls, trade restrictions, shipping disruptions, and critical mineral shortages are becoming an increasingly important feature of the global economy. Yet many investment and risk-management frameworks remain poorly equipped to assess how these shocks propagate through firms, supply chains, and financial portfolios.

This paper introduces a framework called “Chokepoint Shock Maps” that traces geoeconomic shocks through global production networks and connects them to individual firms. Combining input-output network analysis, firm disclosures, and scenario-based stress testing, the framework provides a practical method for assessing how disruptions can spread through interconnected economic systems.

A key finding is that indirect exposures often substantially exceed direct exposures. The analysis also shows that firms within the same industry can experience very different outcomes from the same geopolitical event depending on their position within production networks, supply-chain dependencies, and contractual arrangements. As a result, traditional sector- and geography-based analyses may overlook important vulnerabilities.

For institutional investors, pension funds, banks, insurers, and Chief Risk Officers, the framework offers a practical approach to identifying hidden concentrations and improving portfolio resilience. For regulators, supervisors, and policymakers, it highlights how geoeconomic fragmentation can create systemic vulnerabilities that may not be visible through conventional market-based measures.

The paper provides a timely framework for understanding how geopolitical developments can translate into economic and financial risks and offers practical tools for navigating a world in which economic security and financial stability are increasingly intertwined.