Latin America’s Risk Landscape: Turning Complexity into Competitive Advantage

Latin America’s business environment is shaped by a mix of opportunity and volatility. While the region boasts vast natural resources, a growing technology sector, and expanding agricultural frontiers, it also faces persistent challenges: economic fragility, political instability, climate vulnerability, and regulatory unpredictability. GDP growth is projected to average just over 2% in 2025 and 2026, but cautious investment sentiment and inflationary pressures remain.

Yet amid this uncertainty, opportunity exists. Organizations that rethink their approach to risk – treating resilience as a strategic enabler rather than a defensive necessity – can position themselves to thrive. By understanding the interconnected nature of today’s risks and investing in new strategies, Latin American leaders can build competitive advantage.

How Latin American Leaders Prioritize Today’s Top Risks

Latin American executives are navigating a uniquely complex risk environment, where economic, political, and environmental pressures intersect. Their approach to risk prioritization reflects both the region’s vulnerabilities and its potential for growth, as leaders seek to balance immediate operational challenges with long-term strategic opportunities.

Top Current Risks for Latin America

1. Business Interruption
2. Regulatory or Legislative Changes
3. Cyber Attack or Data Breach
4. Commodity Price Risk or Scarcity of Materials
5. Economic Slowdown or Slow Recovery
6. Political Risk
7. Increasing Competition
8. Cash Flow or Liquidity Risk
9. Supply Chain or Distribution Failure
10. Weather or Natural Disasters

Business Interruption and Supply Chain Disruption

Business interruption remains the leading risk for organizations across Latin American, driven by the region’s exposure to geopolitical shocks, climate-related events, and its dependence on global trade routes and vulnerable local infrastructure. Economies such as Brazil, Argentina, Chile, and Mexico rely heavily on exports—ranging from agricultural products and copper to manufactured goods—making them particularly susceptible to supply chain shocks.

In recent years several high-profile disruptions have underscored this vulnerability. For example, blockades and protests in Peru have repeatedly halted mining operations and delayed shipments of copper and other minerals, impacting global supply chains. In Brazil, port congestion and truck driver strikes have caused significant delays in the export of soybeans and other agricultural commodities. Mexico’s manufacturing sector has experienced interruptions due to cross-border policy shifts and bottlenecks at critical U.S. border crossings, affecting industries such as automotive and electronics.

These disruptions not only result in direct financial losses but also erode customer trust and strain supplier relationships. In response, companies are diversifying their supplier bases, investing in supply chain visibility technologies, and developing robust business continuity plans to better withstand and recover from future shocks. Many are also exploring contingent business interruption insurance to safeguard against unforeseen events, enhancing operational resilience in a region where disruption is a persistent threat.

Regulatory and Political Volatility: Navigating Uncertainty

Regulatory and legislative change, ranked as the second most significant risk, is deeply intertwined with political instability across Latin America, creating an unpredictable business environment. Recent elections in countries such as Argentina, Peru, Colombia, and Mexico have resulted in new governments with varying policy priorities. For example, Colombia has introduced tax reforms and changes to labor and pension laws, while Brazil has updated its data protection and cyber security regulations, requiring businesses to adapt to new requirements.

U.S. trade policy is another factor influencing the region. The United States remains Latin America’s largest trading partner, and recent tariffs – including a 10% baseline tariff on most Latin American exports, with higher rates for certain countries – have introduced additional considerations for exporters. Mexico, while benefiting from some exceptions under the USMCA, continues to face sector-specific tariffs and ongoing trade negotiations that can affect cross-border commerce and investment. These developments have led companies to review supply chains, adjust investment plans, and navigate a more complex regulatory landscape.

To manage these risks, organizations are closely monitoring political and geopolitical developments, investing in political risk insurance, and conducting scenario planning to ensure business continuity. By staying agile and informed, companies can better anticipate regulatory changes, mitigate potential disruptions, and maintain operational resilience in a volatile environment.

The Challenge of Commodity Price Volatility

Commodity price risk and high inflation are central concerns for both businesses and governments in Latin America, where many economies are heavily dependent on the export of natural resources. Countries like Brazil (soybeans, iron ore), Chile (copper), Venezuela (oil), and Argentina (soybeans, corn) rely on these commodities for fiscal revenue and employment. This dependence makes the region highly sensitive to global price fluctuations, which are often driven by geopolitical tensions, supply chain disruptions, and shifting demand from major economies.

For instance, the war in Ukraine led to spikes in food and energy prices, while recent declines in oil, copper, and grain prices have sharply reduced export earnings and government revenues, forcing difficult economic adjustments. Key industries such as mining, agriculture, and energy are particularly exposed, with price swings impacting investment, supply chains, and financial stability.

To manage these exposures, organizations are investing in supply chain visibility tools and diversifying export markets to reduce dependence on single suppliers or vulnerable trade routes. Monitoring geopolitical developments has become critical, as changes in global trade patterns can have immediate impacts on local markets. In the agriculture and energy sectors, parametric insurance solutions are gaining traction, providing rapid payouts based on predefined triggers such as rainfall or temperature extremes.

Building Resilience to Extreme Weather Events

Latin America is one of the world’s most climate-vulnerable regions, facing a cascade of extreme weather events that threaten economies, communities, and key industries, so it is no surprise to see these risks ranked highly in our survey. In recent years the region has endured record-breaking hurricanes, catastrophic floods and prolonged droughts. For example, Chile experienced its deadliest wildfires in over a decade, while Brazil’s southern states suffered historic flooding that caused billions in economic losses and displaced thousands.

Agriculture, a cornerstone of many Latin American economies, is particularly exposed. Droughts in the Amazon and Pantanal have led to crop failures and livestock losses, disrupting food supply chains and driving up prices. In Central America and the Caribbean, hurricanes and floods have repeatedly damaged infrastructure and homes, while also causing significant operational disruption for businesses – forcing closures, interrupting supply chains, and increasing recovery costs.

In response, organizations across the region are prioritizing investments in resilient infrastructure, early warning systems, and climate modeling to protect assets and operations. The adoption of parametric insurance is growing, providing rapid payouts after disasters. Companies are also embedding climate risk into governance and disclosure practices, while strengthening disaster recovery and business continuity planning to minimize operational disruption and accelerate recovery when extreme weather strikes.

Looking Ahead: The Future Risks on Business Leaders’ Minds

Latin American leaders are preparing for a future shaped by digitalization, climate change, and market volatility. The ten risks expected to be top concerns by 2028 reflect this shift:

Top Future Risks for Latin America

1. Cyber Attack or Data Breach
2. Increasing Competition
3. Commodity Price Risk or Scarcity of Materials
4. Regulatory or Legislative Changes
5. Business Interruption
6. Climate Change
7. Political Risk
8. Economic Slowdown or Slow Recovery
9. Cash Flow or Liquidity Risk
10. Artificial Intelligence (AI)

Cyber and AI: Managing the Digital Frontier

Cyber risk is rapidly climbing the agenda for Latin American organizations, driven by the region’s explosive digital growth. Latin America’s technology sector is expanding faster than almost anywhere else, with surging adoption of digital banking, fintech, and e-commerce generating new economic opportunities. However, this rapid digitalization has outpaced investment in cyber security, leaving many organizations exposed. The region now faces some of the world’s highest rates of cyber attacks, with incidents in countries like Brazil, Mexico, Colombia and Costa Rica frequently making headlines.

Several factors compound the challenge: fragmented and constantly evolving regulations, a shortage of specialized cyber security professionals, and the widespread use of personal devices for work all increase vulnerability. Critical infrastructure – including government, healthcare, and communications – has become a frequent target, with attacks ranging from ransomware to massive data breaches. High-profile incidents, such as the ransomware attack that crippled Costa Rica’s government, highlight the potential for cyber threats to disrupt entire economies.

To address these risks, companies in the region are beginning to incorporate cyber resilience into their business strategies. This includes implementing organizational cyber governance, investing in advanced detection technologies, and conducting regular employee training to combat phishing and social engineering. Increasingly, companies are also turning to cyber insurance and developing robust incident response plans.

Artificial intelligence is improving both data security and operational efficiency, but it also introduces new risks. According to the IMF (2024), Latin America is generally lagging behind other regions in AI readiness, although there are significant differences between countries. To harness the potential of AI and mitigate its risks, it is essential for organizations to invest in specialized talent, develop clear regulatory frameworks, and adopt international standards.

Strategies to Navigate Latin America’s Risk Landscape with Confidence

Latin American organizations must embrace a proactive, integrated approach to risk. The following strategies can help leaders manage complexity and build resilience:

1. Harness Data and Analytics for Smarter Decisions

Use advanced modeling and analytics to assess risk, quantify exposure, and inform capital allocation. This is especially critical for managing overlapping risks like cyber and supply chain disruption.

2. Explore Innovative Risk Transfer Solutions

Close protection gaps with parametric insurance, captives, and structured reinsurance. These tools offer flexibility and can be tailored to industry-specific exposures.

3. Reframe Risk Management as a Value Driver

Traditionally seen as a defensive function, risk management is now emerging as a source of competitive advantage for Latin American organizations. By embedding risk considerations into strategic decision-making, companies can identify new growth opportunities, enhance stakeholder trust, and improve operational efficiency.

4. Strengthen Legal and Regulatory Compliance

Given the dynamic and complex regulatory environment in Latin America, organizations should prioritize continuous monitoring of legal changes and ensure robust compliance frameworks. Proactive legal risk management not only prevents sanctions and reputational damage but also enables companies to adapt quickly to new requirements and maintain business continuity.

5. Foster a Culture of Ethics and Transparency

Building a culture rooted in ethics and transparency is essential for long-term resilience. This approach enhances stakeholder trust, supports sustainable growth, and reduces exposure to reputational and operational risks.

6. Promote Interdisciplinary Collaboration

Encourage collaboration between legal, compliance, risk, technology, and operational teams. An integrated approach allows organizations to anticipate emerging risks, respond effectively to regulatory changes, and leverage diverse expertise for strategic decision-making.

Why it Matters

Latin American leaders have the opportunity to turn risk into resilience. By rethinking their approach and investing in new strategies, they can protect their organizations and unlock new avenues for growth.

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