Iran

The live 12-month probability is 41.6%, making this a critical risk. Iran’s history of revolution, internal unrest, insurgency in peripheral regions, confrontation with Israel and the United States, and reliance on coercive security institutions leave it vulnerable to renewed or additional armed violence. Economic weakness and institutional strain further increase the danger that political disputes become militarised.

Recent reporting describes an active US-Israeli war involving Iran, attacks and mine incidents around the Strait of Hormuz, and Iranian preparations to respond if US strikes resume. Tehran’s foreign minister has kept a seven-day ceasefire framework and possible reopening of Hormuz conditional on US compliance, while officials describe a new operational plan. Reports also cite growing domestic unrest and pressure on Iran’s finances and security apparatus.

The largest uncertainty is whether the current ceasefire contacts produce a durable de-escalation or merely pause fighting that could generate a further conflict onset involving domestic actors or renewed foreign attacks on Iranian territory. Markets reflect both possibilities: Polymarket prices continuation of the US-Iran ceasefire through October 31 at 82.5%, but assigns 15.5% to a US invasion before 2027 and 4.5% to regime fall.