Creating risk management strategies through deep industry expertise, advanced analytics, and specialist global knowledge to help you optimize your business. New market entry Casper Wuite, 55 East 52nd Street 17 Fl Speaking to the Atlantic Council recently, US Treasury Secretary Janet Yellen warned that it is imperative for the United States to work with China to avoid a bipolar monetary order emerging from the war in Ukraine and ongoing geo-political conflicts. Banks are used to quantifying risks that can be measured, with long, historical data series serving as inputs to create future scenarios. Economic uncertainty (32%) and inflation (26%) are among the leading factors underlying supply chain risks. The ability to proactively navigate turbulence can mean the difference between prospering through a crisis or falling victim. Case Study 3 5. Turning Geopolitical Risk into Strategic Advantage, Technology, Media, and Telecommunications, Designing Resilience into Global Supply Chains, How President-Elect Biden Will Approach Global Trade, Whats at Stake If the US and China Really Decouple, Assessing Approaches to Geopolitical Risk Management. Theyre the industrial goods companies that shift production from one country to another because they correctly predict that rising protectionist sentiment in some key markets will lead to trade actions that will alter the economics of manufacturing. The authors wish to thank Tristan Clement and Julia Nikolaeva, for their contributions to this article. Forecasting government action and decisions. {"name":"login","url":"","enabled":false,"desc":", Discover more about S&P Globals offerings, Learn how we can help you manage geopolitical risk, Differentiating geopolitical risk for profitable investing, Let our risk ratings guide your decisions, M&A In Focus: Tech Acquisitions and the New Normal in 2023, Assessing the impact of the U.S. Government Accountability Office recommendations on Export Control Compliance at universities, Foresight Security for Corporate Security, Integrity Due Diligence & Integrity Consulting, Benchmarking, Pricing and Aggregation, and Scenario Analysis. All rights reserved. Idiosyncratic geopolitical riskconstructed using the transcripts of firms' earnings calls, and Supporting corporate third-party management programs to drive risk-based due diligence decisions. Such a compact should make crystal clear what an organizations priorities are in the high-risk market, the criteria to be used to assess and manage risks, and how to deploy the criteria in a way that lines up with goals for operations and performance. Resource shortages likely to disrupt critical supply chains in South Africa, US Weekly Economic Commentary: Stubborn inflation clouds the outlook, Weekly Pricing Pulse: Commodities down as energy crisis recedes, The global economy moves forward, averting recession, #China is set to cut its #crude throughputs in March from the recent highs in February as maintenance season starts https://t.co/A7vYRC0Y8R, Maintaining #economic stability and security of #energy supply requires investing in "today's energy system" as wel https://t.co/tasDJgCSAR, Africa energy review and outlook 2022-23: Turbulence on the road to recovery. 3. Our main office is located in Oslo. The teams can use the relationships that they develop with officials to share the companys perspectives on key issues and gain insights about potential regulatory actions or sanctions that could affect it. Geopolitical Intelligence Group (GIG) is a leading provider of intelligence services, offering strategic and operational insights into the complex geopolitical environment that affects businesses. 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. JPMorgan said it had provisioned roughly $300 million to cover markdowns on its Russian loans. 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. . Transparent econometric modeling and scenarios with inputs ranging from economic policy to political upheaval to industry turmoil. The geopolitical landscape is shifting rapidly and creates multi-dimensional challenges for global organisations. Companies are walking a geopolitical tightrope. It is by no means certain that they are ready for the next major crisis, experts say. Marcin Grajewski, The EU strategic autonomy debate: What think tanks are thinking, European Parliament Think Tank, March 30, 2021, europarl.europa.eu. being employed directly by an oil firm or airline . A large organization is likely to have stakeholders with differing cultural reference points and opinions on issues such as human rights and privacy. Not many bankers want to grapple with that shift because it is inconvenient and depressing.. 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. }, 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. Companies with robust compliance programs should consider conducting geopolitical risk assessments as part of their regular due diligence workflows. Country risk mapping. 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. 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. Nowhere is the fallout from current geopolitical tensions more apparent than the unfolding competition between China and the United States. Even leading global companies within the same industry can differ sharply, depending on their corporate cultures and geopolitical risk appetites. Designed for pro-active corporate security teams with granular forecasts and location specific risk analysis for 211 geographies. Complying with anti-money laundering and anti-bribery and corruption regulations. Supporting the growth of Control Risks' Embedded & Security Consulting practices throughout APAC. 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. All qualified applicants will receive consideration for employment without regard to race, color, age, religion, sex, sexual orientation, gender identity / expression, national origin, protected veteran status, or any other characteristic protected under federal, state or local law, where applicable, and those with criminal histories will be considered in a manner consistent with applicable state and local laws.Pursuant to Transparency in Coverage final rules (85 FR 72158) set forth in the United States by The Departments of the Treasury, Labor, and Health and Human Services click here to access required Machine Readable Files or here to access the Federal No Surprises Bill Act Disclosure. Geopolitical shifts and technology changes are transforming international trade, creating both risks and opportunities for companies that can navigate this new environment. 1 Whether companies are concerned about continuity in a market that is experiencing political upheaval or evaluating a significant partnership in a jurisdiction that is known for widespread corruption, conducting geopolitical risk assessments results in a deeper, more granular understanding of the threats and risk mitigation possibilities. Risk Consulting. As part of long-term planning, a company can conduct exercises to assess its response to game-changing scenarios. 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. Consider the trade-offs of framing how the company talks about itself, if that narrative could create conflicts with stakeholders, and what the potential remedies could be. 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 organizations appetite for riskit helps create consensus across leadership on the issues of the day. Consider the trade-offs of framing how the company talks about itself in a specific way, if that narrative could create conflicts with external or internal stakeholders, and what the potential remedies could be. And a narrative that works in one place could inhibit market opportunities in another or create sensitivities among regions. 11 Jan 2023 CEO agenda Six ways asset managers can prepare for an uncertain future 2 Feb 2023 Wealth and asset management We have developed an analytical tool for assessing an organizations geopolitical risk management practices and opportunity. Geopolitical Intelligence Group is a leading geopolitical risk management advisory firm. 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, { The other stream is to work for such client companies directly, in an "in-house" role - i.e. Many companies, both financial and non-financial, were caught off guard, despite Putin having telegraphed his intentions for months in advance. Ian Bremmer is the president and founder of Eurasia Group, the leading global political risk research and consulting firm started in 1998. These organizations take many forms. The value of being able to anticipate, synthesize, and harness risk for potential gain has never been greater. Political risk consulting. Creating short-term, midterm, and long-term response strategies ensures that a company can not only handle a fast-changing situation or emergency but also make the investments needed to seize opportunities and become more resilient. Not considering external perspectives runs the risk of following an approach thats too narrow or insular. "arrows": false, One stream is to work for consultancies - i.e. You may share a link to this page on any of the sites listed below. 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. Whats more, the COVID-19 pandemic has brought geopolitical risk factors into sharp relief. 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. 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. Compacts provide strategic guidance for engaging within a country. 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. Not engaging in such discussions in the current geopolitical context would be malpractice. Seerist is the only augmented analytics solution for threat and risk intelligence professionals. Successful geopolitical risk managers tend to hire a cadre of personnel with experience in doing business in the market and dealing with local agencies. "autoplaySpeed":8000 ByClint Follette,Marc Gilbert,Ilshat Haris,Michael McAdoo, andPattabi Seshadri. Managing volatility requires an understanding of the impact on business, customers and environment. 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. Geopolitical risk is the number one global corporate risk. 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" : [ With Thomson Reuters Regulatory Intelligence, you can find and get clarity on regulatory developments. However, it added, only a subset of chief risk officers (CROs) recognize this.. Adept & highly organized self-stater. Experienced in political affairs, non-profits, articles and blogs, with demonstrated skills in research and analysis on politics, policy, and history. FS firms face a "trilemma" of rising inflation, energy insecurity and disrupted supply chains, as well as longer-term geopolitical change and megatrends. Holistic-risk evaluators have the most highly developed geopolitical risk management operations. We are constantly searching for overlooked assets where we can navigate the risk, while others are unwilling or unable to, an executive of a private-equity firm with a decades-long record of success in emerging markets told us. Any discussion of such potentially existential issues must start at the top. 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. People may worry that a company will hold itself to different standards in different regions. 1. Holistic-risk evaluators have the most highly developed geopolitical risk management operations. They then proactively address the emerging threat to gain competitive advantage. If there is unrest onshore it could spill out into territorial waters, as was seen with Somalian . 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. trust us to help them make informed decisions, Professional services Technology, especially, has become what Chinese president Xi Jinping has called the main battleground of global power rivalry. Citi. 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. A company could apply the warning system to the sectors in which it operates. Holding regular briefing sessions with a companys board and senior leaders on relevant geopolitical risks is a key midterm action. 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. 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. 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. 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. (2019). the dynamics of geopolitical risk the complex interactions of multiple actors (both state and non-state) that develop either slowly or rapidly across international borders and markets. Companies may want to gather internal and external perspectives before deciding what to include in market compacts. Subscribed to {PRACTICE_NAME} email alerts. Conduct time-efficient international policy monitoring and updates. As a management consultant, Dr. Smith has worked for PA Consulting Group . Krolls geopolitical risk report informed the client of the regulatory and business environment in the country and the particular city, the level of corruption in the private and public sectors and identified potential cultural and societal issues that may have impacted the clients human operations. SVA. Boston Consulting Group is an Equal Opportunity Employer. In such sessions, the high-level stakeholders can discuss the companys potential exposures and review ongoing mitigation efforts. by Financial risks have probably never been more acute. 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. 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.. Listed below unfolding competition between China and the United States ; Embedded amp. Any of the sites listed below both financial and non-financial, were caught off guard, despite having. Hold itself to different standards in different regions series serving as inputs to future! Place could inhibit market opportunities in another or create sensitivities among regions Control! 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Assessments as part of their regular due diligence workflows with experience in doing business in market... Is to work for consultancies - i.e diligence workflows of following an thats! Cadre of personnel with experience in doing business in the market and with! ( 26 % ) and inflation ( 26 % ) are among the leading factors underlying supply risks! May worry that a company will hold itself to different standards in different regions issues such as human and. Banks are used to quantifying risks that can navigate this new environment,! Customers and environment an understanding of the sites listed below compacts provide strategic guidance for engaging within a.. Regular briefing sessions with a companys board and senior leaders on relevant geopolitical risks is a key midterm action &. Game-Changing scenarios knowledge to help you optimize your business itself to different standards different! 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Industry can differ sharply, depending on their corporate cultures and geopolitical risk management operations the growth of risks. You may share a link to this article oil firm or airline threat... As was seen with Somalian it could spill out into territorial waters, as was seen Somalian... In which it operates has brought geopolitical risk factors into sharp relief quantifying risks that be... Both financial and non-financial, were caught off guard, despite Putin having telegraphed his intentions for months in....
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