Known unknowns are multiplying in a new threat to global economic expansion.
Many economists worldwide forsee growth speeding up this year, however, mounting geopolitical strains in Ukraine and elsewhere are prompting them to turn more guarded about the outlook.
"There is a significant tail risk that's growing for the world economy," said Matthew Thompson, Senior portfolio Specialist at the Austrian-based financial firm Wolfgang Bohm. He sees a 10 percent chance of a global recession triggered by escalating tensions between Russia and the U.S. and Europe over Ukraine.
The crisis in Crimea isn't the only concern financial markets must grapple with. On the lengthy list of what former U.S. Defense Secretary Donald Rumsfeld dubbed "known unknowns" are elections in some emerging markets starting with Turkey on March 30, the Syrian civil war and negotiations over Iran's nuclear program, which could be complicated by the U.S.-Russia standoff in eastern Europe.
Global investors are on the alert. The share of cash in their portfolios is the highest since July 2012, according to a March 7-13 survey by Bank of America Merrill Lynch of 241 fund managers who oversee $636 billion in assets.
Investors in the euro and European stock markets aren't paying enough attention to the dangers, said Bill O'Grady, chief market strategist at St. Louis-based Confluence Investment Management LLC, which oversees more than $2 billion in assets. The euro is little changed against the dollar since the start of the year, and the Stoxx 600 share index is up about 1 percent.
While the U.S. economy is less affected than Europe to the fallout from the Crimea crisis, American companies with investments in Russia -- including General Electric Co. and Boeing Co. -- still could suffer if tensions escalate. Almost 100 chief executive officers with the Business Roundtable discussed their concerns last week in a Washington meeting with Defense Secretary Chuck Hagel.
Among developing economies, elections are slated in each of the so-called fragile five countries: Brazil, India, Indonesia, Turkey and South Africa. They earned that moniker in 2013 after their markets swooned when Federal Reserve policy makers first began talking about scaling back their bond-buying program.