Why do companies venture into the world’s toughest markets? For some companies, entry is not a choice but a consequence of shifting geopolitical realities. For others, it is a deliberate strategic decision, driven by long-term investment opportunities and the potential to shape emerging markets during periods of transformation. In both cases, success depends on a clear understanding of the risks, robust legal and contractual safeguards, and a flexible strategy capable of adapting to rapidly changing conditions.
What is a High-Risk Jurisdiction?
The term “high risk jurisdiction” extends far beyond active war zones. It encompasses a range of high-risk environments where instability—whether political, social, or economic—poses serious challenges for businesses. High risk jurisdictions can include:
- Countries engaged in external armed conflict
For example, Russia. While the war is being fought on Ukrainian territory, Russia itself is heavily impacted through international sanctions, economic isolation, and regulatory unpredictability.
- Regions experiencing internal unrest or civil conflict
In Myanmar, ongoing political turmoil and military crackdowns have created a volatile environment for both local and foreign businesses.
This category also includes countries in the aftermath of a violent period, like Syria. Earlier this year, as a result of the recent dramatic political changes in Syria, the US, EU, and UK all suspended sanctions on the country. But because the situation is still evolving, investors who choose to return to Syria should be mindful of a range of export controls and restrictions that continue to apply and risks associated with the lack of stability in the region.
- Areas where terrorist groups or criminal organizations control part of a government or economy
In Mexico, for instance, organized crime has infiltrated parts of the economy. According to the American Chamber of Commerce in Mexico, 12% of member companies report that criminal groups have taken partial control of the sales, distribution, or pricing of their goods.[1] This level of interference increases the risk that companies operating in these regions may unknowingly engage with criminal networks.
Why do Companies Operate in High-Risk Jurisdictions?
Not every company enters a high-risk jurisdiction by choice. In some cases, companies find themselves in conflict zones unintentionally. A region that was once stable may become volatile due to political upheaval, armed conflict, or the rise of organized crime. According to the Armed Conflict Location & Event Data (ACLED) project, “in the past five years, conflict levels have almost doubled. For 2020, [ACLED] recorded 104,371 conflict events; [in 2024], for the same period, nearly 200,000.”[2] And this trend shows no sign of slowing. For companies already embedded in these markets, often with significant infrastructure, supply chains or long-term contracts, exiting may not be immediate or even feasible.
Others are drawn to these jurisdictions by the promise of long-term opportunity, particularly in post-conflict environments where reconstruction efforts, untapped consumer markets, and reduced competition due to higher barriers to entry, can create favorable conditions for investment. Ukraine, for example, is already attracting investor interest as stakeholders anticipate large-scale rebuilding and infrastructure development. In 2023, updated investment laws championed by the country’s new promotion investment agency, Ukraine Invest, came into effect. The changes “lower[ed] the threshold of investment needed to access incentives, expand[ed] the types of projects that would be eligible, simplified issues around land rights and offer[ed] tax incentives.”[3]
Research suggests that the financial incentives for operating in high-risk jurisdictions can be substantial. One study by the World Bank found that returns on investment may be up to 8% higher in countries with lower levels of peace.[4] This is often due to lower asset valuations, fewer competitors, and high demand for basic services and infrastructure.
In addition to the financial incentives, companies that enter early into post-conflict markets often gain strategic advantages, including shaping market norms, building strong local partnerships, and securing long-term contracts. Their presence can also play a role in broader economic recovery, contributing to job creation, infrastructure development, and the revitalization of local industries.
However, success in these environments requires more than capital. It demands an understanding of local dynamics, strong risk management frameworks, and the ability to operate with agility in uncertain conditions.
Key Takeaways
High-risk jurisdictions may be fraught with uncertainty, but they also offer rare opportunities: untapped markets, lower operating costs and the chance to lead post-crisis recovery and reconstruction. The potential commercial upside is undeniable. But so are the risks. Legal exposure, operational disruption, and reputational fallout, stemming from perceived complicity in human rights abuses and proliferation of violence, are real concerns that demand careful, strategic management, to navigate successfully.
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This blog post is part of an ongoing series exploring the legal, commercial, and strategic complexities of operating in conflict zones and high-risk jurisdictions. Contributors to this series include Freshfields partners Tim Harkness, Kate Cooper, Josh Kelly, Sylvia Noury, Alexa Van Der Meulen, and Carsten Wendler. Stay tuned for upcoming posts, and please reach out with topics, questions, or experiences you’d like us to cover as part of this ongoing conversation.
For a collection of related previous posts and webinars, please click this link.
[1] Know Your Risk: Terrorist Designation of Cartels on Business Interests in Mexico, FTI Consulting (Jan. 20, 2025), https://www.fticonsulting.com/insights/articles/know-your-risk-terrorist-designation-cartels-business-interests-mexico.
[2] Clionadh Raleigh & Katayoun Kishi, Conflict Index, ACLED, https://acleddata.com/series/acled-conflict-index (last accessed Aug. 13, 2025).
[3] Eugenia Perozo, The Paradox of Foreign Investment in Conflict Zones, Investment Monitor (Feb. 12, 2025), https://www.investmentmonitor.ai/features/the-paradox-of-foreign-investment-in-conflict-zones/.
[4] Id.
