Report

Publication of Policy Report: “Geopolitical Risks Facing Korea”

The Institute for Future Strategy has assessed that the international political and economic order surrounding the Korean Peninsula is approaching a turning point. Against this backdrop, the report comprehensively analyzes, through scenario analysis, the potential geopolitical risks and economic ripple effects that the Republic of Korea may face over the next two to three years, and it proposes corresponding policy responses.

The report evaluates risk factors stemming from the United States, China, Russia, and North Korea, presenting both the most probable scenario and the worst-case scenario, with the aim of contributing to government policymaking.

• United States: Key risks include the continuation of U.S.–China rivalry and conflicts over economic interests with allies arising from Washington’s strategic engagement with Beijing, as well as heightened domestic political polarization within the U.S.

• China: Risks include elite political instability resulting from President Xi Jinping’s consolidation of power and rising external influence campaigns. In the worst-case scenario, the possibility of an invasion of Taiwan is discussed.

• Russia: The protracted war in Ukraine and the potential use of nuclear weapons are identified as major risk variables.

• North Korea: The likelihood of intensified military provocations and the resumption of nuclear testing are highlighted as critical uncertainties.
  
  

These interconnected geopolitical challenges and compounded risks could further destabilize security on the Korean Peninsula. Accordingly, the report emphasizes the need for the Korean government to prepare multi-layered and comprehensive countermeasures.

In particular, it warns that if a geopolitical crisis triggers a chain of corporate bankruptcies and instability in the financial system, Korea could experience a “perfect storm.” Thus, it recommends that the Korean economy strengthen safeguards against tail risks—events with low probability but potentially severe impact.

This study provides not only guidance for improving the government’s crisis-response capabilities but also practical insights for formulating medium- to long-term security, diplomatic, and economic strategies.

Keywords
Korean Peninsula, geopolitical risk, scenario analysis, U.S.–China rivalry, Russia–Ukraine war, North Korea nuclear crisis, economic security, perfect storm, government response strategy