| The war in the Middle East clarifies the risk profile of the three main players present in the region: Iran, China, and the USA with its military fleet. In this first part of a mini-series, I outline aspects of Iran’s risk profile – their risk appetite and risk tolerance. | In this text I express my own opinion, not that of any organization. |
Table of contents
Author: Manu Steens
A. Risk tolerance in pursuing objectives
Since the 1979 revolution, Iran’s main strategic goals have remained largely the same. Iran seeks to reduce American military and political influence in the Middle East, counter Israel, and increase its own regional influence. It does this, among other things, by supporting Shiite political Islam and allies in the region. These allies are often collectively referred to as the ‘Axis of Resistance’. According to analyses by the NATO Parliamentary Assembly, these goals have long been the fixed pillars of Iranian policy.
For a long time, Iran primarily attempted to achieve these goals without directly engaging in war itself. It employed asymmetrical and relatively inexpensive means. This means that Iran does not always operate with a traditional army, but rather acts through armed groups and allies in other countries. Examples include Hezbollah in Lebanon, Hamas in Gaza, the Houthis in Yemen, and groups in Iraq and Syria. In this way, Iran was able to exercise power in the region while attempting to avoid a direct confrontation with stronger adversaries. The Congressional Research Service describes this as a cost-effective way to project power, because it is believed that Iran lacks important conventional military capabilities in some areas.
The situation changed noticeably in 2024. In April and October of that year, Iran carried out direct missile attacks on Israel as direct reprisals for specific Israeli assassinations and attacks on Iranian diplomatic targets and allies. This represented a clear increase in risk tolerance. Iran did not act solely through allies but opted for open military action as a state. In doing so, it partially abandoned its earlier strategy of using proxies to deny direct involvement. Analysts at the Atlantic Council described this as a step that helped Israel cross a “mental Rubicon“: a boundary in thinking about direct action against Iran.
B. Comfort with uncertainty
Historically, Iran has often operated in ambiguous and uncertain situations. The country exploited gray zones: situations in which it is not always clear who exactly is responsible for an attack or action. By using proxy networks, Iran was able to exert influence without a direct and unambiguous attribution to Tehran always being possible. The fact that the Islamic Republic has survived for decades under sanctions, regional wars, and American pressure also demonstrates that the regime has become accustomed to uncertainty and pressure .
In 2024 and 2025, Iran faced severe setbacks . Hezbollah and Hamas weakened, Assad’s Syria collapsed, and Israel launched direct attacks on Iranian air defenses and ballistic missile infrastructure. Yet, Tehran seems to view its survival under this pressure as confirmation that its approach is working. Iran International reports that analysts warn Tehran may not view 2025 as a defeat, but rather as proof that it can withstand unprecedented pressure and continue. As a result, the willingness to take risks could increase in 2026.
Iran has also long used strategic uncertainty regarding its nuclear program. Iran has allowed enough ambiguity to persist regarding its nuclear intentions to create deterrence without formally crossing a clear line. This ambiguity can cause adversaries to doubt exactly what Iran can or wants to do. According to the Congressional Research Service, the strategic setbacks of 2024 appear to have shifted the debate within Iran regarding the potential development of nuclear weapons into an unprecedentedly open discussion about their actual development.
C. Tolerance for possible negative consequences
Iran has shown that it pays a heavy price for severe economic and social consequences when pursuing its ideological and geopolitical goals. The country has lived with sanctions, high inflation, and pressure on the currency for decades. In March 2025, inflation stood at 37.1%, and the currency dropped to 1,000,000 rial per dollar. Yet, this did not lead to a major strategic withdrawal. In other words, economic pain has not yet led Iran to completely abandon its core strategy.
On a military level, the events of 2024 have made it clearer where the boundaries lie . Iran’s proxy network proved insufficient to deter Israel from taking military action against Iran itself. Moreover, the costs for Israel to strike targets within Iran appeared relatively limited. This created a new and uncomfortable reality for Tehran. The Atlantic Council states that the strategic landscape in the Middle East had changed by early 2025 and that Iran was more vulnerable than its leadership realized.
According to the analysis by Reset DOC , Iran consequently appeared to shift from regional expansion to strategic control. This means that Iran seems to place less emphasis on further expansion of influence and more on preserving what is still achievable. In doing so, pragmatic endurance is becoming more central than ideological leadership. This evolution indicates that Iran is re-evaluating which negative consequences are still acceptable, especially since its regional position has weakened.
Despite heavy military confrontations and previous bombardments of vital infrastructure, Tehran shows little fear at the negotiating table in May 2026. Instead of backing down, Iran employs a maximalist negotiation strategy. The regime demands that the US first abandon crucial levers (such as sanctions and the naval blockade) before Iran makes definitive concessions. This points to a very high risk tolerance; the regime dares to delay the talks or even risk their failure in order to force a deal more favorable to them.
This attitude in the peace talks shows that the regime in Tehran does not capitulate under pressure , but prefers a dangerous game of calculated escalation. The risk appetite is great enough to risk military confrontations , driven by the conviction that their geopolitical leverage (uranium, the Strait of Hormuz, and regional proxies) will eventually force the opposing side to make substantial economic and strategic concessions.