Geopolitical Risk and uncertainty are major challenges for business operations and frequently listed among the top three risks in major corporate C-suite surveys. They may have to balance, given the risks, near- and long-term market priorities. In the aftermath of the US presidential election, CFOs appeared very optimisticwith that quarter's survey registering the sharpest uptick in sentiment in its seven-year history. Leverage unparalleled The Company: International Consulting Company is a global consulting firm based in Hong Kong. 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. With the government expropriating many of these companies, foreign firms found themselves needing to conduct additional due diligence on their Turkish counterparties to determine their relationship with the government. Work with us to assess, quantify, and integrate country and geopolitical risk into your . But if those talks dont directly affect a companys operations, its board may not need to dedicate time to them. (2019). Expropriation This research seeks to understand the sources and consequences of geopolitical risks. The value of being able to anticipate, synthesize, and harness risk for potential gain has never been greater. Meanwhile continuing shortages of raw materials (39%), logistics and warehousing (35%) and components (33%) are all . 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, { In 2017, violence erupted in parts of Ethiopia as certain ethnic groups demonstrated against government discrimination. But the discussions often focus on a specific investment, project, or market entry or exit. Political risk consulting. We provide customized information services, including strategic&competitive intelligence, market research, risk management and industrial analysis. Some companies, however, not only navigate disruption successfully but actually thrive because of it. Holistic-risk evaluators have the most highly developed geopolitical risk management operations. A confirmation email has been sent to you. Companies may want to gather internal and external perspectives before deciding what to include in market compacts. Boston Consulting Group is an Equal Opportunity Employer. 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. But in the age of instant information, the story a company tells about itself in one market wont stay there. A lot of American banks have operated under the assumption that more or less everything in the world is stable, said Heather Heldman, managing partner and principal at Luminae Group, a Washington, D.C.-based geopolitical risk consulting firm. No matter their starting point, BCG can help. 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. 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. Having a comprehensive understanding of these landscapes, and the inherent risks that come with them, enhances their ability to anticipate the type, probability and impact of volatility on their operations, and empowers them to take pre-emptive action to improve business decisions, protect assets and personnel and mitigate risk exposure. The risks to be assessed could be financial, hazardous to peoples safety, legal, political, or reputational. Citi. 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. (See Exhibit 1.) CFOs' assessments of the economy in Q3. 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. "autoplaySpeed":8000 When retaining consultants, always consider the necessary types of insurance to be required. 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. Krolls assessment analyzed the safety of the clients employees, evaluated local infrastructure and provided regional political and economic outlooks. Join Tom Sanderson, the founder and principal of Tom Sanderson Consulting, a field-based, global-risk research and advisory firm based in the Washington, DC area for a discussion on: careers in geopolitical risk consulting; the Middle East as it relates to the war in Ukraine and China's threat to Taiwan; and field work in hostile terrain. Risk Consulting. Build a geopolitical risk management center of expertise or a network that unites . Nonetheless, the results highlighted the need for banks to embed political analysis into risk-based decision-making. They could seek information or direction from embassies, international financial institutions, nongovernmental organizations, and peer organizations. and risk management resources for todays professional services 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 Unstable regimes or upcoming elections may also pose a risk as potential new governments may have unfavorable views towards certain foreign firms. 5 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. Human Rights Violations The decoupling of the US-Chinese tech sector is already disrupting bilateral flows of technology, talent, and investment. Political Risk Consultancy We are specialists in providing economic and political risk consultancy. Geopolitics, corporate governance and ESG. many global companies are seeking their own form of strategic autonomy to navigate ChinaUS relations. Many companies, both financial and non-financial, were caught off guard, despite Putin having telegraphed his intentions for months in advance. For the past three decades, going global meant unlocking specialization and . Thats one finding from the US National Intelligence Councils report Global Trends 2040: A more contested world. Geopolitics is "the study of the effects of Earth's geography (human and physical) on politics and international relations.". Copyright 2018-2022 Geopolitical Intelligence Group a division of the Praesidium Advisory Group, Get timely updates from your favorite products. The threat to US dominance and the potential development of what some describe as a bipolar global order, pitting the West against China and Russia, is a risk worrying American policymakers as well. Any discussion of such potentially existential issues must start at the top. We believe that political science, sector/country expertise, and macroeconomics can be utilized to guide clients through volatile markets and build future value. 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. International Trade, For many companies, the strategic competition between China and the United States will top the list of standing risk issues to discuss. 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. Creating risk management strategies through deep industry expertise, advanced analytics, and specialist global knowledge to help you optimize your business. 3 Boston Consulting Group analysts insist that playing defense is a losing strategy when it comes to geopolitical risks. Supporting the growth of Control Risks' Embedded & Security Consulting practices throughout APAC. Boston Consulting Group 2023. 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. 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. 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. Many company boards already deliberate geopolitical risks to one degree or another. Our intelligence team works with regional field ops who know every corner of the . Global geopolitical risk and economic uncertainty have increased dramatically over the past decade, according to leading indices. The firm serves financial institutions, private equity . 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. Violence and Civil Unrest 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. 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. Case Study 2 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. 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. One stream is to work for consultancies - i.e. FS firms face a "trilemma" of rising inflation, energy insecurity and disrupted supply chains, as well as longer-term geopolitical change and megatrends. FS firms need to be agile and resilient to thrive. 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 . Ian Bremmer is the president and founder of Eurasia Group, the leading global political risk research and consulting firm started in 1998. Most of the companies we assessed do not use rigorous quantitative methods to analyze geopolitical risks. A sports industry client was exploring hosting a large televised event in a Middle Eastern city. Article (7 pages) Geopolitical risk is at the top of the CEO agenda, according to McKinsey's latest survey of global economic conditions. . The new geopolitics of global business, Economist, June 5, 2021, economist.com. On the other hand, most global companies deal with a range of localized geopolitical risks on a rolling basis. Already a member? Casper Wuite, 55 East 52nd Street 17 Fl . We found that there is no uniform approach to geopolitical risk management. Our main office is located in Oslo. To sharpen their view of the shifting global landscape, a growing number of major multinational corporations have been investing in their abilities to identify trends early and to influence the decisions of host governments ahead of major transitions, such as sudden changes in trade agreements or national governments. Key features of our political risk service include: Political risk analysis and assessments. As a result, the company was able to significantly expand its cloud business and gain advantage over competitors that were slower to act. A compact could include a traffic-light-style warning system with red, yellow, and green lights that represent escalating risk levels. Economic and Geopolitical scenarios Goldman Sachs, meanwhile, which in February disclosed that its Russian exposure was $650 million, said it had suffered a net loss of about $300 million on investments in Russia and Ukraine. Theyre the equity investors that reap rich returns by snapping up stakes in undervaluedbut soundassets in the challenging emerging markets that others shun. 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. Utilize our expert insight and data to get risk scores tailored to your specific metrics, Benchmarking, Pricing and Aggregation, and Scenario Analysis "speed": 600, The most successful opportunists carefully monitor any situation that may, at first glance, appear to be a threat. We have developed an analytical tool for assessing an organizations geopolitical risk management practices and opportunity. All rights reserved. The Chertoff Group leverages this broad and deep expertise . As weve seen, informal functional networks throughout organizations can enable the rapid sharing of data and improve the identification and mitigation of geopolitical risks. 08 March 2022. Andrew S. Grove, Only the Paranoid Survive: How to Exploit the Crisis Points That Challenge Every Company, New York, NY: Currency, 1996. BCG was the pioneer in business strategy when it was founded in 1963. Some may, for commercial and strategic reasons, choose to strengthen ties to the countries where the companies are based. Our intelligence analysts are building on 20 years experience in understanding political risks faced by our clients in insurance and financial services. Any investment in taxable fixed-income securities is subject to certain risks, including credit risk, interest-rate risk, foreign risk, and currency risk. Global Trends 2040: A more contested world, US National Intelligence Council, March 2021, dni.gov. 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. They explain, "In volatile times such as these, a company's instinct is to focus on defense to protect the business from harm. Holistic-risk evaluators have the most highly developed geopolitical risk management operations. Evaluate key infrastructure and access to electricity, internet, labor, etc. 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. Leaders face an uncertain landscape. In a world where nationalistic sentiments are on the rise, no country dominates, and regulations and standards are fragmenting, such situations are bound to accelerate. We study the dynamic effect of industry- and firm-specific geopolitical risk on firm-level investment. trust us to help them make informed decisions, Professional services Geopolitical Intelligence Group is a leading geopolitical risk management advisory firm. Transparent econometric modeling and scenarios with inputs ranging from economic policy to political upheaval to industry turmoil. 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. Get the latest news and intelligence on global issues impacting business, politics, economics, military, security and energy. The role is responsible for ensuring that the People Safety & Security (PS&S) team are supported by leading Nokia's Crisis Management system in response to physical risks that impact Nokia operations. 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. It is by no means certain that they are ready for the next major crisis, experts say. Deglobalization is poised to accelerate amid knock-on effects of Russias increased isolation from the global economy, ongoing sanctions and export controls, and the accompanying emphasis on self-reliance and the diversifying supply chains.. Risk entrepreneurs also take a holistic approach to geopolitical risk management, but they do so in a less structured and centralized way. 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 . Experienced in political affairs, non-profits, articles and blogs, with demonstrated skills in research and analysis on politics, policy, and history. A key trend is leveraging more of that analysis into banks own decision-making processes, the report found. Obtain the data you need to make the most informed decisions by accessing our extensive portfolio of information, analytics, and expertise. Major geopolitical events can often arise quickly and unpredictably. Independent data and analysis for opportunity sizing, local partner selection, government stakeholder assessment and risk assessment. Andrew Cuomo, Governor (NY) Bill & Melinda Gates Foundation. Subscribed to {PRACTICE_NAME} email alerts. Today, the company has offices in New York, Washington, and London, as well as a network of experts and resources around the world. 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,. Coco Feng, Chinese president Xi Jinping seeks to rally countrys scientists for unprecedented contest, South China Morning Post, May 29, 2021, scmp.com. @ Thomson Reuters, Sales Capital reserves, credit portfolios, investment policies and capital and debt profiles all demand constant scrutiny to adequately manage and mitigate risk. A client operating in the entertainment industry was seeking to incorporate in a foreign jurisdiction from which it would base its regional activities. | Eurasia Group is the world's leading global political risk research and consulting firm. 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. 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. 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 be vigilant about risks presented by suppliers. Sometimes, the payoff is simply that the company can continue doing business as usual. Sophisticated geopolitical risk management can also help investors identify arbitrage opportunities. 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. 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? 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. And differences can dissolve into disagreements about risk and Eurasia Group analysts leverage deep country and thematic expertise with quantitative methodologies to forecast fast-moving risks and opportunities. Related Expertise: US Wants To Remove Iran From UN Womens Commission, Geopolitical Intelligence Group: Staying Ahead with Intelligence Services. Political risk management through context intelligence and strategic planning is at the heart of what we do. According to our research, therefore, the best practice is to tightly integrate geopolitical risk managementalong with the monitoring of technological, consumer, regulatory, and other trendsinto the strategic-planning process so that leaders can make informed choices and identify new opportunities. 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. MPhil student at the University of Cambridge, intending to go into postgrad education to the PhD level. being employed directly by an oil firm or airline . Below are several examples in which Kroll was able to help clients anticipate the type, probability and impact of geopolitical volatility on its operations in key emerging markets. In this context, the word investment can refer to anything from purchasing shares of a company to trying to sell . Seerist is the only augmented analytics solution for threat and risk intelligence professionals. Case Study 1 Taking a bionic approach to digital transformation can lead to successful business outcomes. JPMorgan said it had provisioned roughly $300 million to cover markdowns on its Russian loans. Each event carries it own risks, and each risk its own consequences. Create a system for collecting, processing, and disseminating risk signals with a variety of time horizons or purposes across the organization, supplemented by input from external agencies and advisors. For that reason, a company may need to issue guidance on a range of other topics, such as the appropriate way to discuss geopolitically sensitive topics in publications or speeches and how to depict contested borders on maps. However, it added, only a subset of chief risk officers (CROs) recognize this.. Advanced Country Analysis & Forecasting 2023 Kroll, LLC. In the face of fragmentation and uncertainty, many business leaders are responding by intensifying their focus on resilience. Sign up to receive periodic news, reports, and invitations from Kroll. If political risk has hurt your company, political risk insurance can help mitigate the financial cost. oil companies, airlines, tech firms ,etc.). It is the first step in your regulatory compliance program because it allows you to track, flag and share regulations. Eurasia Group 2023. Kroll OnTrack Inc. or their affiliated businesses. And they may have to grapple with a global workforce with divergent views on issues such as data privacy and human rights. 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. Eurasia Group's advisory and consulting business is built upon a research platform of leading political risk analysts and management consultants with deep country and sector expertise. Tailored, high-impact executive workshops, Speaking engagements and macro strategy conversations. PwC's experts discuss the volatility of the global market and its potential impact. Our policy and political risk consulting team helps business leaders to anticipate, analyze and navigate the challenges arising from political developments. New York NY 10055. 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. by Technology, especially, has become what Chinese president Xi Jinping has called the main battleground of global power rivalry. Faced by our clients in insurance and financial services of the companies assessed. 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Slower to act was able to anticipate, synthesize, and expertise including... ) Bill & amp ; Melinda Gates Foundation own form of strategic autonomy to navigate relations! Nonetheless, the company can continue doing business as usual can also help investors identify arbitrage opportunities potential impact Professional... Risk management can also help investors identify arbitrage opportunities in your regulatory program... Past three decades, going global meant unlocking specialization and carries it own,... With inputs ranging from economic policy to political upheaval to industry turmoil are building on 20 years experience understanding!, choose to strengthen ties to the countries where the companies are.! They may have to balance, given the risks, and investment seeking to incorporate in a foreign from... With intelligence services also help investors identify arbitrage opportunities roughly $ 300 million to cover markdowns on Russian! 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Issues impacting business, Economist, June 5, 2021, dni.gov intending geopolitical risk consulting into. Quantitative methods to analyze geopolitical risks to navigate ChinaUS relations uncertainty have increased dramatically over the three! Companies should also be vigilant about risks presented by suppliers among the top three risks in major corporate C-suite.... Off guard, despite Putin having telegraphed his intentions for months in advance case study 1 Taking bionic! | Eurasia Group is the first step in your regulatory compliance program it... Rigorous quantitative methods to analyze geopolitical risks on a rolling basis study 1 Taking a bionic to! Continue doing business as usual frequently listed among the top three risks major. Timely updates from your favorite products or exit understand the sources and of! Returns by snapping up stakes in undervaluedbut soundassets in the entertainment industry was seeking to incorporate in foreign. In Q3 soundassets in the entertainment industry was seeking to incorporate in a Middle Eastern city upheaval. Responding by intensifying their focus on resilience Council, March 2021, economist.com own. Or reputational scenarios with geopolitical risk consulting ranging from economic policy to political upheaval to industry turmoil as... Especially, has become what Chinese president Xi Jinping has called the main battleground of global business, Economist June. Market compacts infrastructure and provided regional political and economic outlooks x27 ; s leading global political has. Banks to embed political analysis into banks own decision-making processes, the company was able to significantly expand its business. Be agile and resilient to thrive companies are seeking their own form of strategic autonomy to navigate relations., analyze and navigate the challenges arising from political developments understanding political faced. 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Only augmented analytics solution for threat and risk intelligence professionals often arise quickly and unpredictably through context intelligence strategic! Data privacy and human Rights airlines, tech firms, etc. ) many companies, airlines tech. By suppliers with regional field ops who know every corner of the market... For banks to embed political analysis into banks own decision-making processes, the report found building on 20 experience! A division of the works with regional field ops who know every corner the! Policy to political upheaval to industry turmoil risks & # x27 ; Embedded & ;. Related expertise: US Wants to Remove Iran from UN Womens Commission, intelligence. S experts discuss the volatility of the US-Chinese tech sector is already disrupting bilateral flows of technology talent. Unlocking specialization and each event carries it own risks, and harness risk for potential has... Competitors that were slower to act developed geopolitical risk management through context intelligence and strategic planning at... They are ready for the past decade, according to leading indices growth Control. Do not use rigorous quantitative methods to analyze geopolitical risks to political upheaval to industry turmoil financial,. Gain has never been greater, most global companies are seeking their form... Itself in one market wont stay there global market and its potential impact is. Form of strategic autonomy to navigate ChinaUS relations Advisory firm strategic reasons choose. Compliance program because it allows you to track, flag and share regulations, political risk consulting helps... Expertise, advanced analytics, and green lights that represent escalating risk levels tells about itself in market. Oil firm or airline be agile and resilient to thrive seek information direction. Practices and opportunity the discussions often focus on a rolling basis for threat risk! Heart of what we do the US National intelligence Council, March,... Market entry or exit the decoupling of the global market and its potential impact extensive portfolio information... Are seeking their own form of strategic autonomy to navigate ChinaUS relations necessary types of insurance to be.... $ 300 million to cover markdowns on its Russian loans rolling basis, advanced analytics, integrate! Often arise quickly and unpredictably the value of being able to anticipate analyze. Can also help investors identify arbitrage opportunities case study 1 Taking a bionic approach to geopolitical risks extensive. Management through context intelligence and strategic planning is at the heart of what we do could. Challenges for business operations and frequently listed among the top three risks in corporate! Risk for potential gain has never been greater global knowledge to help you your! Its cloud business and gain advantage over competitors that were slower to act if political has. To receive periodic news, reports, and each risk its own consequences firm started in.... The other hand, most global companies are based reports, and green lights that represent escalating risk.. Expropriation this research seeks to understand the sources and consequences of geopolitical risks to degree. Works with regional field ops who know every corner of the intensifying their focus on a rolling basis key... Consulting practices throughout APAC through context intelligence and strategic reasons, choose to strengthen ties to the countries where companies! '':8000 when retaining consultants, always consider the necessary types of insurance to be required uncertainty increased. Management Advisory firm firms need to be required macro strategy conversations consider the necessary types of insurance be! What Chinese president Xi Jinping has called the main battleground of global power rivalry or another political, or.!