The Architecture of Risk in the Iran–Israel Conflict
Written by Elisa Garbil – 27.06.2025
The ongoing Iran–Israel conflict serves as a potent case study of risk in modern geopolitics. The military confrontations between the two states have escalated into a volatile standoff that threatens to spiral into regional war, draw in global powers, and redefine the thresholds of nuclear engagement. Having the USA now implicated as well after Midnight Hammer, where they decided to bomb several alleged nuclear infrastructures, as well as Teheran, this conflict does not simply present a series of linear threats; rather, it embodies a complex architecture of risk: layered, interacting, and compounding across military, political, economic, and strategic domains. Understanding these interlocking dimensions is essential to appreciating both the gravity of the moment and the narrow path toward de-escalation. We have Joseph Daher on the podcast to discuss these implications. Listen here.
Risk of Military Escalation
At the heart of the conflict lies the immediate risk of military escalation. In the most recent phase of hostilities, Israel has undertaken airstrikes deep inside Iranian territory, targeting critical nuclear facilities and high-ranking military personnel. Iran has retaliated with waves of missile and drone attacks, targeting both military and civilian infrastructure. These actions, while significant in themselves, represent only the surface of the broader strategic dilemma. Each strike not only incurs damage but also narrows the scope for diplomatic recalibration, increasing the likelihood of miscalculation or disproportionate response.
The military risk here is not limited to conventional confrontation. Both nations operate within a regional landscape densely populated with proxy actors and latent frontlines. Hezbollah in Lebanon, militias in Iraq and Syria, and Houthi forces in Yemen extend the geographic and tactical range of the conflict. A localised engagement therefore holds the potential to ignite a much wider regional war. Each decision to strike or retaliate carries the implicit possibility of expanding the conflict beyond national borders, destabilising neighbouring states, and drawing external actors into a broader conflagration.
Strategic and Nuclear Risk
The confrontation has also reshaped long-standing assumptions about nuclear deterrence. Historically, the principle of mutual deterrence helped constrain state behaviour, particularly among actors suspected of nuclear ambition. However, the present conflict suggests a shift in strategic calculation. Israel’s targeting of Iranian nuclear infrastructure, such as facilities at Natanz, Arak, and Isfahan, represents a direct challenge to Iran’s nuclear trajectory. While these strikes are not new in Israeli doctrine, their depth and frequency in this current cycle mark a departure from previous thresholds.
Iran, in turn, faces a dilemma: to absorb the blows and risk appearing strategically weak, or to escalate in ways that might include unconventional weapons. While there is no confirmed evidence that either side is preparing to use nuclear weapons, the erosion of prior red lines indicates a new environment of heightened nuclear risk. The situation has effectively rewritten the rules of nuclear engagement, rendering prior doctrines less predictable and more dangerous. In such a context, deterrence becomes less about preventing conflict and more about managing its expansion: a fragile and unstable arrangement.
Economic and Global Systemic Risk
Beyond the battlefield, the Iran–Israel conflict poses serious risks to the global economy. Iran controls access to the Strait of Hormuz, a vital artery through which nearly one-fifth of the world’s oil supply passes. Even the threat of closure or disruption can send shockwaves through global markets. While Iran has not yet exercised this option, its potential to weaponise economic geography remains a key lever in the conflict. Oil prices have already fluctuated in response to perceived escalations or diplomatic overtures, illustrating the deep interdependence between regional conflict and global economic stability.
In addition to commodity markets, investor confidence is sensitive to the broader uncertainty generated by the conflict. The possibility of a wider Middle Eastern war, U.S. military involvement, or disruptions to global supply chains introduces systemic risk. These are not isolated variables; they interact and multiply. A spike in oil prices may drive inflation globally. A protracted conflict may lead to refugee flows, strain humanitarian systems, and divert international attention from other crises. The Iran–Israel war is not only a local issue, it is a pressure point in the architecture of global order.
Political and Diplomatic Risk
Diplomacy in this environment is constrained by hardened domestic politics, geopolitical rivalries, and the erosion of institutional trust. Neither Iran nor Israel currently possess an easy political off-ramp. Iranian leadership is under pressure from hardline elements within its Revolutionary Guard, while also facing domestic dissatisfaction fueled by years of economic hardship and social unrest. Israel, for its part, operates under a right-wing government committed to a policy of military preemption and deterrence. These internal dynamics reduce both sides’ room to maneuver, increasing the likelihood that military options will be favoured over diplomatic ones.
Internationally, efforts by European and Gulf states to mediate have so far produced only tentative movement. While forums for dialogue exist, they remain fragile and often subordinate to the fast-moving logic of the battlefield. The United States, historically a central actor in Middle Eastern diplomacy, is itself navigating internal division. Calls for restraint exist alongside pressures to align more explicitly with Israel’s objectives. This dualism introduces ambiguity into U.S. policy and reduces its effectiveness as a stabilising force.
Interconnectedness and Feedback Loops
Perhaps the most dangerous aspect of the current crisis is the way risks interact and reinforce each other. Military strikes beget political entrenchment. Political rigidity undermines diplomatic engagement. Failed diplomacy encourages proxy expansion. Proxy escalation feeds economic volatility. Economic instability inflames domestic unrest. This recursive pattern makes the conflict not just dangerous, but structurally self-escalating.
In systems theory, such dynamics are known as feedback loops, where an initial disturbance amplifies itself through a series of dependent reactions. The Iran–Israel conflict now resembles such a system. Without decisive intervention to interrupt the cycle, the crisis could evolve from a series of discrete confrontations into a protracted and generalised regional war.
Managing the Risk: Toward De-escalation
Given the enormity of what is at stake, the need for risk management is urgent. De-escalation is not merely a matter of moral preference, but of strategic necessity. Any sustainable resolution must include a credible ceasefire, a framework for renewed nuclear negotiations, and guarantees against future escalation through verified monitoring. Gulf and European states are well-positioned to facilitate such a process, provided they receive backing from major powers and commitment from the primary actors.
Critically, risk mitigation requires more than tactical pauses. It demands structural rethinking: a reassertion of diplomatic norms, the revitalisation of international mediation frameworks, and the insulation of global systems from the shockwaves of localised wars. It also requires restraint, especially from major powers whose involvement can either amplify or dampen conflict dynamics.
Conclusion
The Iran–Israel conflict of 2025 reveals the multidimensional nature of risk in modern international affairs. It is a conflict whose dangers lie not only in what has already occurred but in what remains structurally possible. Military actions, nuclear thresholds, economic vulnerabilities, political rigidity, and systemic feedback loops converge in a volatile and deeply unstable configuration. Risk, in this context, is not a distant theoretical concept, it is the defining reality. The capacity of regional and global actors to understand, contain, and ultimately defuse this configuration will determine not just the trajectory of this conflict, but the resilience of the international order itself.
