strategy. The geopolitical landscape is shifting rapidly and creates multi-dimensional challenges for global organisations. Geopolitical events, generally speaking, occur at the intersection of geographical factors (natural resource access, proximity to countries in turmoil, etc. Another short-term action is to invest in strategy, PR, and government-relations teams that can serve as the companys points of contact with senior government officials and key stakeholders in multiple jurisdictions. Our . Case Study 2 Thank you! your toughest business challenges, Government professionals Site by Odgis+Co and ICVM Group. Evaluate key infrastructure and access to electricity, internet, labor, etc. It could also apply the system to the entities with which it does business, separating those with which a local office can work without needing additional approval from those that need risk approval and those with which an office should never work with. How to factor geopolitical risk into technology strategy | EY - US Trending US pandemic response and relief funding - proactively mitigating fraud, waste and abuse 2 Feb 2023 The COO Imperative: How human emotions can unlock supply chain success 23 Jan 2023 Consulting 2023 Global economic outlook: Transforming uncertainty into opportunity One short-term action that a company can take is establishing a crisis-response unit to take the lead on identifying potential risks and developing mitigation strategies. After consulting with top business leaders and legal, public-policy, and risk professionals at Fortune 500 companies in multiple industries, we suggest that company leaders can use a five-pronged approach to managing geopolitical risk. 2. Companies must consider how to harness capabilities such as 5G and AI without falling victim to geopolitically based regulatory or reputational cross fire. Intelligence-led solutions for underwriters and insurance exposure management teams to efficiently identify, evaluate and monitor risks and opportunities at country, region and location specific levels, A credible, independent view of external operational and strategic risks and the tools to integrate those risks into your financial evaluation, Improve the quality of investment decision-making with pressure-tested macroeconomic and sector inputs, expert political analysis and scenario alternatives, {"items" : [ Banks are used to quantifying risks that can be measured, with long, historical data series serving as inputs to create future scenarios. Read our @SPGCI report: https://t.co/3wDIVkZ5hW, For the first time since 2006, The Progressive Corp. recorded more personal lines net premiums written than GEICO C https://t.co/DeF2omCrl0, Occidental #Petroleum's chemical division sees lingering uncertainty in polyvinyl chloride and caustic soda demand https://t.co/9cqw2zMJPo, { Cultivating such a local risk-management network with key stakeholders and sources who have insights into critical topics can also help an enterprise maintain sharp situational awareness. While no one can predict the future . Start with the board Many company boards already deliberate geopolitical risks to one degree or another. Boston Consulting Group partners with leaders in business and society to tackle their most important challenges and capture their greatest opportunities. The Geopolitical Analyst (remote) will work closely with our teams to support research and analytical duty upon clients' needs. Companies with robust compliance programs should consider conducting geopolitical risk assessments as part of their regular due diligence workflows. An escalation of geopolitical events can lead to outright wars . We have developed an analytical tool for assessing an organizations geopolitical risk management practices and opportunity. Channeling the policy debates under way in the European Union, Coco Feng, Chinese president Xi Jinping seeks to rally countrys scientists for unprecedented contest, South China Morning Post, May 29, 2021, scmp.com. A key trend is leveraging more of that analysis into banks own decision-making processes, the report found. 5 Improve your understanding and modeling of country and economic risk across countries and sectors. & account inquiries, For CA: Do not sell my personal information. Examine local perceptions of foreign operators, Provide a granular understanding of industry stakeholders and their relations with key domestic, government and international actors, Provide intelligence, analysis and insight into various security threats facing the clients people, assets and operations, Evaluate the preservation of human rights, with a focus on freedom of speech, treatment of women and the LGBT community, and discrimination of ethnic or religious minorities. One stream is to work for consultancies - i.e. In volatile times such as these, a companys instinct is to focus on defenseto protect the business from harm. CFO sentiment got off to a very strong start in the first quarter of 2017. Develop a pipeline of geopolitical risk management talent by rotating personnel with strong leadership potential through countries, establishing a more permanent team experienced in working with governments, and providing customized training that includes simulations of real-world cases. We have updated our Privacy Policy and Terms of Use for Eurasia Group and its affiliates to clarify the types of data we collect, how we collect it, how we use data and with whom we share data. Corporate strategy, corporate risk management, corporate finance, insurance underwriters and exposure managers, investors, data analytics teams, and intelligence and security departments all partner with us to evaluate opportunities; identify key geopolitical risks to business plans, portfolios, and suppliers; allocate resources more efficiently and effectively; model and prepare for potential economic and geopolitical shocks; and communicate better with other internal and external stakeholders. Geopolitical risks affecting banks or banks customers have expanded significantly in recent years, according to a global survey report issued late last year from consulting firm EY. However, it added, only a subset of chief risk officers (CROs) recognize this.. Not engaging in such discussions in the current geopolitical context would be malpractice. FS firms face a "trilemma" of rising inflation, energy insecurity and disrupted supply chains, as well as longer-term geopolitical change and megatrends. Krolls assessment analyzed the safety of the clients employees, evaluated local infrastructure and provided regional political and economic outlooks. "speed": 600, Our operational and strategic advisory services inform our clients with valuable . Theyre the technology companies and oil producers that can tell a political backlash is brewing well before it hits full force and then use their foresight to reposition their businesses ahead of competitors. Holistic-risk evaluators have the most highly developed geopolitical risk management operations. In-depth analysis, they recognize, does not come solely from algorithms. International Trade, To ingrain the importance of external relations throughout their organizations, some companies rotate high performers and potential candidates for upper management into country leadership positions, where risk management becomes one of their duties. Business strategy and operational efficiency require constant evaluation in a complex and often volatile environment. Boston Consulting Group 2023. Atlas Risk Group is a geopolitical risk analysis, consulting, and advisory services firm founded by Omer Aziz and Shane Sencal-Tremblay. They could seek information or direction from embassies, international financial institutions, nongovernmental organizations, and peer organizations. Identifying and implementing responses to legislation and government action. We grouped companies into four general archetypes according to the extent to which they recognize and act on opportunities arising from geopolitical shiftsin addition to mitigating the downside risksand the intensity of focus and sophistication of processes with their organizations. Trade Wars and a Stronger Europe. 1. . trust us to help them make informed decisions, Professional services Even leading global companies within the same industry can differ sharply, depending on their corporate cultures and geopolitical risk appetites. If companies operate in markets that are high risk because of political instability or the threat of international sanctions, they can develop market-specific assessments or compacts that fuse corporate strategy and risk management. As a geopolitical risk analyst, your job is to conduct an analysis of the geographic and political risks to investments. Our Asia-Pacific footprint is now a huge advantage.. They view disruption strategically, as a source of opportunity; embed risk management practices across the organization; and use advanced geopolitical-risk-monitoring tools and processes. According to our research, the consistent winners apply a highly developed approach to geopolitical risk management that emphasizes opportunity rather than just mitigation, involves the entire organization, and leverages sophisticated and robust analytical processes. The degree to which banks systematically analyze political risks varies across the industry. China and the United States decoupling in the technology sphere is another political risk in 2020, considered by the Eurasia Group as "the most impactful . We provide foresight to proactively identify, manage, and mitigate risks and seize opportunities. Exploring government strategy. Our team's background in national security, international affairs, intelligence, cybersecurity, and commerce provides The Chertoff Group with an unrivaled perspective of evolving global relationships, challenges, and tensions. Because the company sells its products almost everywhere, problems that pop up in one country often may have already been solved in another. By using our website you consent to our Terms and Conditions and Privacy Policy, including the transfer of your personal data to the United States from your country of residence (if different), and our use of cookies as described in our Cookie Policy. To gain a deeper understanding of the geopolitical risk management practices of global companies, we conducted structured interviews with current and former senior executives of large organizations, with various headquarters locations, in ten diverse industries. A quick message or email to the global functional marketing, finance, or risk community, the company told us, allows for rapid troubleshooting, the cross-pollination of insights, and the sharing of best practices. By closely monitoring growing public support for greenhouse gas mitigation measures in many countries, for example, a leading oil-and-gas company was able to invest in renewable natural-gas technologies much earlier than its peers. Providing a regular forum for a board to examine pressure points and operating realities from multiple perspectives and air diverging views doesnt just improve decision making and establish an appetite for riskit helps create consensus across leadership on the issues. Note: Political risk consulting firms specializing in analyzing the business risk presented by the political environment in a region or country--including but not limited to regulatory risk in particular sectors, risks of appropriation or nationalization, and broader geopolitical risks. 5-minute read. Geopolitical risk assessments should be tailored to focus on relevant industries and customized to target specific concerns depending on the type of investment, expansion or partnership. Stratfor Worldview is the world's leading geopolitical intelligence platform. 2 We provide customized information services, including strategic&competitive intelligence, market research, risk management and industrial analysis. Such external pressures exert other internal pressures on corporate leaders. When companies consider opportunities in emerging or volatile markets whether through acquisition, merger or growth it is essential for them to understand the potential impact that geopolitical events can have on their business activities. Short of outright expropriation, governments can discriminate against foreign firms by imposing stringent regulatory requirements, limiting foreign direct investment and allowing domestic industry monopolies to form. A major global technology company offers another good illustration. Our policy and political risk consulting team helps business leaders to anticipate, analyze and navigate the challenges arising from political developments. Geostrategic Business Group | EY - Global Close search Trending Why Chief Marketing Officers should be central to every transformation 31 Jan 2023 Consulting The CEO Imperative: How will CEOs respond to a new recession reality? Some of these political consulting clients include: Airbnb. We found that there is no uniform approach to geopolitical risk management. In such discussions, its of utmost importance to make sure that all affected geographic regions are represented. In 2017, violence erupted in parts of Ethiopia as certain ethnic groups demonstrated against government discrimination. As geopolitical events can influence market conditions in industrialized countries just as much as they can impact developing countries, assessing and understanding them through the conduct of an effective geopolitical risk assessment will help mitigate risk exposure. Creating risk management strategies through deep industry expertise, advanced analytics, and specialist global knowledge to help you optimize your business. 1 3. Yet few companies consistently act on it. Indeed, in its most recent geopolitical risk dashboard, the BlackRock Investment Institute put a technological decoupling between China and the United States as the third highest risk, with a widening of the conflict in Ukraine between NATO and Russia and major cyber-attacks causing significant damage to infrastructure and financial markets seen as the top two risks. Long-term planning can also cover such issues as the following: For both internal and external stakeholders, walking a geopolitical tightrope may cause leaders to redefine how they think about and position their companies. And differences can dissolve into disagreements about risk and A holistic view uses four lenses: global geopolitical trends and scenarios, ongoing operations, investment decision making, and frequent monitoring of evolving events and development that can affect the business. Leveraging more of that analysis into banks own decision-making processes, the report found quarter of 2017 safety! 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