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 Channeling the policy debates under way in the European Union, BCG was the pioneer in business strategy when it was founded in 1963. Sometimes, the payoff is simply that the company can continue doing business as usual. 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. many global companies are seeking their own form of strategic autonomy to navigate ChinaUS relations. 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 2 Through our geopolitical risk team we bring together stakeholders across your organisation that own geopolitical risk exposures; helping diverse teams collectively get to grips with the changing world, understand gaps and duplication in protection, mitigate risks and identify opportunities. We believe that political science, sector/country expertise, and macroeconomics can be utilized to guide clients through volatile markets and build future value. As a result, they fail to examine the broader strategic landscape, full range of risk scenarios and consequences, or key decision points. 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. We evaluated their organizations approaches along three dimensions: the strategic role of geopolitical risk management within the company, the ways in which different parts of the organization are leveraged, and the use of risk management processes and tools. 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. Complying with anti-money laundering and anti-bribery and corruption regulations. Our Asia-Pacific footprint is now a huge advantage.. Andrew Cuomo, Governor (NY) Bill & Melinda Gates Foundation. Sorry, something went wrong. People may worry that a company will hold itself to different standards in different regions. & account inquiries, For CA: Do not sell my personal information. Geopolitical risk, however, is unlike credit, liquidity, or counterparty default risk. for political and security risk firms that sell their services or analysis to client companies (e.g. Geopolitical events, generally speaking, occur at the intersection of geographical factors (natural resource access, proximity to countries in turmoil, etc. Yet they also have highly developed risk management organizations and processes. Independent data and analysis for opportunity sizing, local partner selection, government stakeholder assessment and risk assessment. Access daily analysis of world events, detailed country reports, proprietary country and sovereign risk ratings, and comprehensive economic forecasts and historical data to assess your companys investments and future growth, Foresight Security for Corporate Security In much the same way that companies screen for ultimate beneficial ownership or reputational risk as part of their pre-investment or pre-partnership due diligence processes, companies should conduct geopolitical due diligence before entering an emerging or volatile market or ahead of a business partnership with a company in a jurisdiction that they dont have a deep understanding of. Most companies do not have a dedicated team of full-time employees devoted to geopolitical risk management. Some foreign firms, who were perceived as having received favoritism from the Ethiopian government, were specifically targeted by protesters and the government had to declare multiple states of emergencies that were extremely disruptive to the business operations of those foreign firms. Holistic-risk evaluators have the most highly developed geopolitical risk management operations. Yet few companies consistently act on it. 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 . Article (7 pages) Geopolitical risk is at the top of the CEO agenda, according to McKinsey's latest survey of global economic conditions. "Heightened political risk globally raises the threshold for unrest, with implications for shipping, such as the ability to secure crews and access ports safely. Stratfor Worldview is the world's leading geopolitical intelligence platform. Capital reserves, credit portfolios, investment policies and capital and debt profiles all demand constant scrutiny to adequately manage and mitigate risk. Equity investments are subject to market risk or the risk that stocks will decline in response to such factors as adverse company news or industry developments or a general economic decline. The value of being able to anticipate, synthesize, and harness risk for potential gain has never been greater. American Express. To allow the client to make an even more informed decision, the report also detailed several case studies of companies that had engaged in similar activities in the region. . Companies are walking a geopolitical tightrope. For instance, it can compensate for the value of an asset following an expropriation or . Improve your understanding and modeling of country and economic risk across countries and sectors. Instead, boards can dedicate regular standing time to analyzing how to respond to the geopolitical risks that their enterprises face as part of a broader board effort to build more resilient companies. Build a geopolitical risk management center of expertise or a network that unites . Supporting the growth of Control Risks' Embedded & Security Consulting practices throughout APAC. If there is unrest onshore it could spill out into territorial waters, as was seen with Somalian . As one of the country's top political consulting firms, Global Strategy Group has worked with many diverse and high-profile clients to serve a range of unique needs. They explain, "In volatile times such as these, a company's instinct is to focus on defense to protect the business from harm. 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. This sentiment largely continued in the second . Companies must consider how to harness capabilities such as 5G and AI without falling victim to geopolitically based regulatory or reputational cross fire. Our intelligence analysts are building on 20 years experience in understanding political risks faced by our clients in insurance and financial services. A counterparty who defaults on a contract, or whose business . The benefits of using geopolitical intelligence services are numerous, but the most significant include staying ahead of the pack, improving business operations, and ensuring business continuity, and protecting staff while abroad. your toughest business challenges, Government professionals strategy. Casper Wuite, 55 East 52nd Street 17 Fl 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. We offer our . Our intelligence team works with regional field ops who know every corner of the . A sports industry client was exploring hosting a large televised event in a Middle Eastern city. Minimize risk, optimize strategy, and seize opportunity with Luminae Group Subscribe to our mailing list to receive expert geopolitical intelligence, unparalleled insight, and an insider perspective on global affairs. Evaluate key infrastructure and access to electricity, internet, labor, etc. Many governments have introduced laws requiring companies to take actions to mitigate the risk of adverse human rights impacts. Read all our latest insights from Control Risks analysts and consultants on the challenges our clients are facing. Companies should also be vigilant about risks presented by suppliers. Others may opt to identify as global entities because of the access it accords them to pursue business opportunities in emerging markets. The firm serves financial institutions, private equity . 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. Subscribed to {PRACTICE_NAME} email alerts. 3 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. Geopolitical events can manifest themselves in many ways. The companies with the most disciplined approach, however, often use a combination of processes and tools to look at risks during different time frames and with different rates of periodic review. trust us to help them make informed decisions, Professional services Work with us to assess, quantify, and integrate country and geopolitical risk into your . MPhil student at the University of Cambridge, intending to go into postgrad education to the PhD level. Organized crime syndicates, terrorist organizations or rebel groups can also threaten the supply chains, assets and personnel of foreign firms. The ability to proactively navigate turbulence can mean the difference between prospering through a crisis or falling victim. The negative effects of climate change and progressively severe and frequent extreme weather events are becoming harder to ignore. The Volatility and Risk Institute has embarked on a study of geopolitical risk and its relation to financial risks. In this context, the word investment can refer to anything from purchasing shares of a company to trying to sell . 5 Idiosyncratic geopolitical riskconstructed using the transcripts of firms' earnings calls, and Thats one finding from the US National Intelligence Councils report Global Trends 2040: A more contested world. But in the age of instant information, the story a company tells about itself in one market wont stay there. Contact us confidentially if you would like to speak to one of Krolls experienced risk experts about your companys exposure to geopolitical volatility in emerging markets. 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. Boston Consulting Group 2023. Eurasia Group 2023. MAX's Geopolitical Intelligence Services knows your part of the world because we're part of it too. But the discussions often focus on a specific investment, project, or market entry or exit. In addition to their normal duties, country chairs are responsible for liaising with all external stakeholdersincluding national and local governments, community organizations, and other enterprises. In volatile times such as these, a companys instinct is to focus on defenseto protect the business from harm. Please try again later. 2. Read more. Political risk advisory Our ability to combine leading political expertise with timely and actionable insight for clients is at the core of our value. CFOs' assessments of the economy in Q3. Cultural Missteps Kroll was able to provide a report detailing the countrys foreign relations, its position as an economic and business center in the region, the local and regional attitudes towards foreign direct investment and the jurisdictions evolving tax laws for foreign firms, which helped the client decide whether to proceed with incorporating in the country. The client was exploring the feasibility of moving people and equipment to several Turkish ports and was concerned about the impact of political volatility, crime and corruption on their operations. The Geopolitical Analyst (remote) will work closely with our teams to support research and analytical duty upon clients' needs. Ian Bremmer is the president and founder of Eurasia Group, the leading global political risk research and consulting firm started in 1998. . Companies also have been attempting to measure the impact of their lobbying efforts on governments, such as by benchmarking the success of their advocacy compared with that of their industry peers or estimating potential cost savings. One test could explore the conditions in which the company may be compelled to ring-fence its IT infrastructure (to protect against cyberattacks or comply with regulatory requirements) or split off its business in a particular region. . 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. <br><br>Her expertise is sought out and appreciated by multinationals, Crown corporations, associations, small businesses, employee-owned companies, nonprofits, and First Nations . 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. Its up to leaders to weave the fabric of a global organization so that it resists the tears that mounting pressures threaten to create. Cyber risks are believed to have the deepest impact on supply chains rated by 34% as a high impact and 54% as medium. Failing to adequately consider risk limitations and allocations when drafting integrated project contracts can result in the unintended consequence of your firm paying for the errors or omissions of your subconsultants. Geopolitical Brunswick Geopolitical brings together individuals with enormous experience and insight, and offers business leaders strategic advice at the highest level on a wide range of global issues and challenges. Some may, for commercial and strategic reasons, choose to strengthen ties to the countries where the companies are based. Case Study 2 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. 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. Questions to ask about key business risks arising from geopolitical and related crises Strategic, operational, financial and compliance risks are common level-one risk categories that board members and management need to consider. Kroll OnTrack Inc. or their affiliated businesses. In 2020, it will move beyond strategic tech . Never miss an insight. and risk management resources for todays professional services The authors wish to thank Tristan Clement and Julia Nikolaeva, for their contributions to this article. The report draws on the survey results from nearly 700 experts and decision-makers globally who were asked about their concerns . "dots": false, A confirmation email has been sent to you. Advanced Country Analysis & Forecasting Already a member? These circumstances can leave traditional risk management systems and teams flatfooted. 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. 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. SVA ( www.stevevickersassociates.com) is a specialist international risk mitigation, corporate intelligence and risk consulting company. Internationally it poses increasing management challenges, particularly at board level. In the next two decades, competition for global influence is likely to reach its highest level since the Cold War. 1. Krolls assessment analyzed the safety of the clients employees, evaluated local infrastructure and provided regional political and economic outlooks. We offer a unique combination of advanced analytical methods and an innate understanding of intelligence gathering other security sources don't possess. Conduct time-efficient international policy monitoring and updates. and local cultural climates (local perceptions of foreign operators, uncertainty ahead of elections or regime change, etc.). Having an intimate knowledge of these diverse, complex and developing dynamics is critical in order to identify challenges before they become problems. International Trade, Citigroup, which had been trying to sell its Russian retail operations when the war started, said its potential losses could come to as much as $3 billion, and put aside $1 billion in loan-loss reserves. Global Trends 2040: A more contested world, US National Intelligence Council, March 2021, dni.gov. Team of full-time employees devoted to geopolitical risk, however, is unlike credit, liquidity, or business. 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