‘No Such Thing as Unlikely’: What Banks Should Take From the Iran Conflict

As the Israel-Iran conflict continues to unfold, U.S. involvement poses ongoing challenges for banks. In an exclusive interview, Claudine Fry, who leads the global issues team at the Control Risks consultancy, outlined several ways the current situation—and what might come next—could pose challenges for financial institutions. 

Cyber: Expect Low-Level Disruptions, Not Catastrophe 

Control Risks, which advises clients across the banking industry, has seen a surge in cyber operations since Israel’s initial strikes, mostly targeting Israeli entities. But following the U.S. strikes on June 22 “an expansion of targeting to include U.S. interests” is a growing concern, Fry said. The Iranian state is unlikely to go after U.S. critical infrastructure directly—but she said some U.S., UK, Canadian, and Northern European banks are potential targets for low-sophistication attacks like DDoS, data leaks, and defacements. 

Why? Because they’re viewed as softer targets than government systems, and a successful hit makes for a splashy headline. “Banks should prepare for scenarios where they and their partners are disrupted or named by activist or proxy groups,” Fry said, “and also run resilience tests against technologies that may be targeted by known Iranian threat groups.” 

Energy Disruption = Credit Risk Exposure 

Fry flagged potential “protracted disruption to the energy market”—whether from targeted attacks or broader destabilization—as a credit risk that banks can’t afford to ignore. If shipping lanes are threatened or oil infrastructure takes a hit, companies tied to affected regions or energy-dependent operations may face contract cancellations, force majeure declarations, or cash flow trouble. These disruptions can directly affect the financial position of borrowing companies, which may, in turn, affect bank exposure. 

Sanctions and Compliance: Watch for Policy Divergence 

Fry noted that divergence between U.S. and EU sanctions policy “will continue to be a key trend banks should monitor closely.” As Washington and Brussels take differing stances on the Israel-Iran conflict, institutions may face growing challenges navigating cross-border compliance. That complexity, Fry suggested, could be further compounded by geopolitical tensions in the months ahead. 

Flashpoints and the Myth of ‘Unlikely’ 

Beyond Iran, Fry urged banks not to discount low-probability geopolitical risks just because they seem far off or unfamiliar. From renewed tensions in the Korean Peninsula to growing competition in the Arctic and space, she said the list of flashpoints is growing—and evolving. “There is no such thing as ‘unlikely’ anymore,” she said. Identifying plausible shock scenarios and rehearsing responses is essential. Even if a specific event never materializes, the process strengthens institutional readiness for whatever does. 

Bottom line: Be proactive, think globally, and don’t wait for escalation to start scenario-planning. As Fry put it, “Geopolitical risks impact organizations in so many different ways—it is critical that financial institutions have a broad range of functions and perspectives involved in discussing and planning for flashpoints to erupt.”