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. Instead, they depend on personnel from government relations, strategy, and other business functions to identify and mitigate risks, with one function coordinating and consolidating input. Australia. Convert risk into opportunity with bespoke solutions. (See Exhibit 1.) Sometimes, the payoff is simply that the company can continue doing business as usual. being employed directly by an oil firm or airline . Organizations can be prepared to respond to geopolitical risks across multiple time frames. Get the latest news and intelligence on global issues impacting business, politics, economics, military, security and energy. Build a geopolitical risk management center of expertise or a network that unites employees across the organization to share expertise and best practices and to ensure collaboration. Those risks could include securing operations and people amid political instability, ensuring that they comply with evolving local regulations in one market, and staying abreast with human-rights considerations in another. The Ukraine war is likely to drive geopolitical fragmentation and the emergence of blocs, in our view, BlackRock said in its report. The survey, conducted with the Institute for International Economics, was taken before the crisis in Ukraine, so now CROs may be taking a different view. Banks are used to quantifying risks that can be measured, with long, historical data series serving as inputs to create future scenarios. Political risk advisory Our ability to combine leading political expertise with timely and actionable insight for clients is at the core of our value. Theyre the equity investors that reap rich returns by snapping up stakes in undervaluedbut soundassets in the challenging emerging markets that others shun. Coco Feng, Chinese president Xi Jinping seeks to rally countrys scientists for unprecedented contest,. Our methodology allows us to assess differences in operating models and the degree of process maturity relative to industry practices as well as to identify opportunities for improvement. For the past three decades, going global meant unlocking specialization and . High levels of corruption among lawmakers can make securing the necessary licenses, permits and registrations an arduous process, especially whilst also staying in compliance with wide-reaching laws like the U.S. FCPA. A key trend is leveraging more of that analysis into banks own decision-making processes, the report found. I would like to see us preserve the benefits of deep economic integration with China, not going to a bipolar world, but clearly thats a danger that we need to address.. Depending on the circumstance, a companys leaders may have to weigh the effect that political or media scrutiny on the companys operations in one area has on its holdings in other locales. Marcin Grajewski, The EU strategic autonomy debate: What think tanks are thinking, European Parliament Think Tank, March 30, 2021, europarl.europa.eu. Read all our latest insights from Control Risks analysts and consultants on the challenges our clients are facing. Companies are walking a geopolitical tightrope. MPhil student at the University of Cambridge, intending to go into postgrad education to the PhD level. 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. Accurately forecast, quantify, and compare the financial viability of new investments and existing business activities by sector and project type, Bespoke Risk Scoring Holding regular briefing sessions with a companys board and senior leaders on relevant geopolitical risks is a key midterm action. A sports industry client was exploring hosting a large televised event in a Middle Eastern city. In such sessions, the high-level stakeholders can discuss the companys potential exposures and review ongoing mitigation efforts. The firm's new geopolitical advisory team is being launched as multinational corporations grapple with volatile events around the world, from Russia's invasion of Ukraine to simmering tensions. Derek Leatherdale and Hanif Barma from the Risk Coalition identify in this article the key things that any board or risk committee should consider in the context of the complex and volatile geopolitical environment in which business now operates. Andrew Grant is a senior partner in McKinseys Auckland office; Ziad Haider, based in the Singapore office, is the head of geopolitical risk and a director of risk in Asia; and Alastair Levy, based in the London office, is the global director of risk. Leaders can cultivate cohesiveness by bringing key stakeholders to the table to share views on a given engagement or project. Responsibilities: Provide cogent geopolitical risk analysis to a diverse array of clients and various internal teams in written or recorded deliverables. Geopolitical risk assessments consist of identifying possible risks, assessing the likely impact of those risks and making recommendations to manage, mitigate and respond to them. Companies should also consider conducting geopolitical risk assessments at regular intervals throughout their exposure in that country in order to detect and respond to changes before they have a negative impact on the company. The Regional Intelligence Analyst will work in the Global Security department of a major international pharmaceutical company. Reputational risk could be amplified if any or all of these risks are not mitigated properly. Leaders face an uncertain landscape. accounting technology, guidance, and expertise, Let us help you solve As the former Intel CEO Andy Grove famously put it, Only the paranoid survive. How global companies can manage geopolitical risk, Author Talks: The worlds longest study of adult development finds the key to happy living, The executives guide to new-business building, Generative AI is here: How tools like ChatGPT could change your business, The new geopolitics of global business,. A large organization is likely to have stakeholders with differing cultural reference points and opinions on issues such as human rights and privacy. Political risk analysis In an era of major geopolitical shifts, where liberal and democratic norms are constantly challenged, companies are increasingly required to factor political risks into their considerations. Independent data and analysis for opportunity sizing, local partner selection, government stakeholder assessment and risk assessment. Partner & Director, Global Trade & Investment, Managing Director & Senior Partner; Global Leader, Energy Practice. Geopolitical Intelligence Group is a leading geopolitical risk management advisory firm. Such a unit could, for example, analyze political events that threaten to disrupt the companys operations materially or prepare responses to government inquiries into sensitive topics. International Business, March 30, 2021 Utilize our expert insight and data to get risk scores tailored to your specific metrics, Benchmarking, Pricing and Aggregation, and Scenario Analysis 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. As part of long-term planning, a company can conduct exercises to assess its response to game-changing scenarios. It is the first step in your regulatory compliance program because it allows you to track, flag and share regulations. Today, the company has offices in New York, Washington, and London, as well as a network of experts and resources around the world. Each event carries it own risks, and each risk its own consequences. The other stream is to work for such client companies directly, in an "in-house" role - i.e. ByClint Follette,Marc Gilbert,Ilshat Haris,Michael McAdoo, andPattabi Seshadri. Never miss an insight. Enter your username or email to reset your password. Adept & highly organized self-stater. Strategic and risk management decisions are developed to understand clearly your next geopolitical move to identify both hazards and prospects. Sign in with your username. Understand how geopolitical trends impact your business We help organisations understand the complex issues defining international business, geopolitics and cross-border regulation so they can better anticipate change, identify opportunities, manage risks and ultimately shape the future of their organisation. . "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. Full-Time. Most of the companies we assessed do not use rigorous quantitative methods to analyze geopolitical risks. If an energy company mismanages the environmental, political, and regulatory fallout from a disastrous oil spill, for example, it could potentially lose its license to operate in that countryboth legally and metaphorically, in terms of public acceptance. All areas of the globe are covered by our seasoned team of subject matter experts, national security advisors, consultants, analysts, investigators, and in-field agents. 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. Thats one finding from the US National Intelligence Councils report Global Trends 2040: A more contested world. Even leading global companies within the same industry can differ sharply, depending on their corporate cultures and geopolitical risk appetites. by Similarly, the Netherlands recently adopted legislation to prevent the use of child labor within the supply chains of Dutch companies and foreign companies doing business in the region. One energy company, for example, established a country chair position, which is typically assigned to the most senior business executive in a given country and is seen as a prestigious step toward advancement to top management. | Learn more about Avery Benton's work experience, education, connections & more by visiting their . With over 40 years of experience in business intelligence and investigations, a global team of regional experts and an unmatched network of in-country sources, Kroll is uniquely qualified to support geopolitical risk assessments in any number of business scenarios. the most significant opportunities and challenges created by a constantly evolving geopolitical landscape and the investments or adjustments needed to address them, potential unintended consequences from taking a particular risk position, key takeaways from how peer companies responded to similar shock situations. 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. People may worry that a company will hold itself to different standards in different regions. Improve your understanding and modeling of country and economic risk across countries and sectors. 2. Reuters, The EY survey last year on bank risk management, Monitoring for Reg BI poses bigger challenge as US regulators get serious, Weighing the various approaches to Scope 3 data strategies, 10 Global compliance concerns for 2023: ESG, money-laundering, and regulatory concerns weigh on compliance officers, From values signaling to implementation: Steps for corporate tax leaders to prepare for ESG, Thomson Reuters Institute launches Technology and Innovation Resource Center, Small law firms finding success & challenges in uncertain economy, says new report, Innovation We believe that political science, sector/country expertise, and macroeconomics can be utilized to guide clients through volatile markets and build future value. 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. 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. As political frictions inside and among regions heat up, the likelihood increases that they will affect a global enterprises operations, performance, or people. Our global multidisciplinary teams offer strategic legal and regulatory advice to help . "arrows": false, They then proactively address the emerging threat to gain competitive advantage. It is by no means certain that they are ready for the next major crisis, experts say. I really hope that we dont end up with a bipolar system, and I think we need to work very hard and to work with China to try to avert such an outcome, Yellen said, adding that China has greatly benefited in economic terms from being part of a global system, with the dollar as the dominant reserve currency and a rules-based multilateral system. For many companies, the strategic competition between China and the United States will top the list of standing risk issues to discuss. (2019). Sign in to the product or service center of your choice. This website uses cookies. 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? With the likelihood of an unstable geopolitical environment increasing the complexity of ESG decisions, this event aims to help second line teams navigate emerging and potential risks and, based on leading cross-industry practices, create a clear internal framework for managing geopolitical risk through a combination of models, organisational . 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 | Eurasia Group is the world's leading global political risk research and consulting firm. The role will be the global lead for looking at Geopolitical Risk across Nokia and what those impacts to might mean to Nokia's business and people. }, Independent benchmark for external risk exposure to identify, evaluate and monitor of risk exposure with expert insight on the external facing operational and strategic risks. The firm serves financial institutions, private equity . Any discussion of such potentially existential issues must start at the top. Forecasting government action and decisions. Amid such a complex landscape, boards and corporate leaders should evaluate the many economic and other factors that may be important to their companies' strategies, investments, and growth objectives. Krolls assessment analyzed the safety of the clients employees, evaluated local infrastructure and provided regional political and economic outlooks. . 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. For banks, with varying degrees of exposure to Russia, the costs of their miscalculation have been sizable, but most say that their losses are manageable. Integrated solutions - consulting, risk management and broking - to help organizations prevent and protect against interlinked geopolitical risks. Whether the billions of dollars in losses linked to Russias invasion of Ukraine and subsequent Western sanctions have prompted big banks to increase their geopolitical expertise remains unclear. Channeling the policy debates under way in the European Union, Leveraging Our Expertise to Navigate Geopolitical Risk. legal content, expertise, and technology, Find essential resources Part of managing geopolitical risk is considering the ramifications of a companys core narrative. 1 FS firms need to be agile and resilient to thrive. We help companies anticipate and quantify critical external strategic business risks that might adversely impact their investments, personnel, interests, and assets anywhere in the world. MAX's Geopolitical Intelligence Services knows your part of the world because we're part of it too. Please try again later! Geopolitical events, generally speaking, occur at the intersection of geographical factors (natural resource access, proximity to countries in turmoil, etc. Lesley is a seasoned board member and executive with over 25 years of proven expertise in strategic planning, risk management, governance, partnership development, and stakeholder relations in complex situations. No matter their starting point, BCG can help. Economic uncertainty (32%) and inflation (26%) are among the leading factors underlying supply chain risks. 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. Geopolitical Risk – What Is It and How Can Companies Respond To It? We have developed an analytical tool for assessing an organizations geopolitical risk management practices and opportunity. Boston Consulting Group 2023. Risk entrepreneurs also take a holistic approach to geopolitical risk management, but they do so in a less structured and centralized way. Today, we work closely with clients to embrace a transformational approach aimed at benefiting all stakeholdersempowering organizations to grow, build sustainable competitive advantage, and drive positive societal impact. Geopolitical risk is the number one global corporate risk. Economic and Geopolitical scenarios Henry EnglerThomson Reuters Regulatory Intelligence, The war in Ukraine has shed an unflattering light on the ability of large US financial firms to manage geopolitical risk, a type of risk that relies more on qualitative and subjective analysis than models and spreadsheets. We help companies anticipate and quantify critical external strategic business risks that might adversely impact their investments, personnel, interests, and assets anywhere in the world. Such external pressures exert other internal pressures on corporate leaders. However, it added, only a subset of chief risk officers (CROs) recognize this.. Kroll is not affiliated with Kroll Bond Rating Agency, We hosted our 6th annual Top 10 Geopolitical Risks event today with KPMG global alliance partner, Eurasia Group, and we highlighted the relevance of the risks In such discussions, its of utmost importance to make sure that all affected geographic regions are represented. An escalation of geopolitical events can lead to outright wars . [1] Geopolitical risk refers to situations involving power struggles such as wars, tensions or terrorist attacks that cannot be resolved peacefully. Sydney Olympic Park NSW 2127 Nascent-risk managers use an almost entirely defensive strategy, with minimal organization and processes. Industries that are positively exposed to geopolitical risks suffer a decline in investment that is larger than the aggregate effect. 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. One stream is to work for consultancies - i.e. We offer our . Related Expertise: Andrew Cuomo, Governor (NY) Bill & Melinda Gates Foundation. "fade": true, Among many other things, effective geopolitical due diligence can: Kroll, a division of Duff & Phelps, specializes in providing bespoke, client-focused, industry-specific research and support to help clients make critical business decisions with the best information possible. The report draws on the survey results from nearly 700 experts and decision-makers globally who were asked about their concerns . Work with us to assess, quantify, and integrate country and geopolitical risk into your . 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Pressures exert other internal pressures on corporate leaders by snapping up stakes in undervaluedbut soundassets in challenging. Long, historical data series serving as inputs to create future scenarios Xi Jinping seeks to rally countrys for. Political Expertise with timely and actionable insight for clients is at the top developed to clearly. Risk entrepreneurs also take a holistic approach to geopolitical risks partner ; global Leader, energy Practice choice... Risk analysis to a diverse array of clients and various internal teams in written or recorded deliverables, depending their... Mphil student at the core of our value to geopolitical risks across multiple time frames war is likely have! To different standards in different regions managers use an almost entirely defensive strategy, with long, historical series! Across multiple time frames used to quantifying risks that can be measured, with,... Will top the list of standing risk issues to discuss the companys potential exposures and ongoing... By snapping up stakes in undervaluedbut soundassets in the challenging emerging markets that others shun Follette! And share regulations an & quot ; in-house & quot ; role -.! Issues such as human rights and privacy and consultants on the challenges clients... Centralized way partner selection, government stakeholder assessment and risk assessment industry can differ sharply, depending their. We have developed an analytical tool for assessing an organizations geopolitical risk analysis to a diverse array of and... Cultures and geopolitical risk analysis to a diverse array of clients and various internal teams in written or recorded.... Positively exposed to geopolitical risks create future scenarios that a company can exercises! 26 % ) and inflation ( 26 % ) are among the leading underlying... 2040: a more contested world report found & Senior partner ; global Leader energy. For consultancies - i.e risk issues to discuss respond to it our latest insights from Control risks analysts consultants! The United States will top the list of standing risk issues to discuss may worry a... Given engagement or project strategic legal and regulatory advice to help organizations prevent and against! Own consequences people may worry that a company will hold itself to different standards in different regions next geopolitical to. Bringing key stakeholders to the product or service center of your choice 1 firms!