The challenges that geopolitical risks create will get worse. 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. Seek to continuously measure and monitor the impact of geopolitical risk management activities on the business. Learn More link icon. BCG's international trade consulting experts help companies make the right movesand mitigate riskto unlock competitive advantage. for broadcasters and publishers, Explore our tax and Conduct time-efficient international policy monitoring and updates. Yet they also have highly developed risk management organizations and processes. Political risk consulting firms. 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. 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. Meanwhile continuing shortages of raw materials (39%), logistics and warehousing (35%) and components (33%) are all . Part of managing geopolitical risk is considering the ramifications of a companys core narrative. 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. The ability to proactively navigate turbulence can mean the difference between prospering through a crisis or falling victim. SVA. They explain, "In volatile times such as these, a company's instinct is to focus on defense to protect the business from harm. Transparent econometric modeling and scenarios with inputs ranging from economic policy to political upheaval to industry turmoil. Stay connected with us and get all latest updates. Geopolitics is personal. Companies should also be vigilant about risks presented by suppliers. As the former Intel CEO Andy Grove famously put it, Only the paranoid survive. Such external pressures exert other internal pressures on corporate leaders. 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. In this context, the word investment can refer to anything from purchasing shares of a company to trying to sell . Krolls assessment analyzed the safety of the clients employees, evaluated local infrastructure and provided regional political and economic outlooks. Most companies do not have a dedicated team of full-time employees devoted to geopolitical risk management. Designed for pro-active corporate security teams with granular forecasts and location specific risk analysis for 211 geographies. 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. ), policy decisions (limits to foreign direct investment, tolerance of corrupt elites, etc.) "Heightened political risk globally raises the threshold for unrest, with implications for shipping, such as the ability to secure crews and access ports safely. 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. Country risk mapping. The value of being able to anticipate, synthesize, and harness risk for potential gain has never been greater. In the face of fragmentation and uncertainty, many business leaders are responding by intensifying their focus on resilience. While there is no universal formula for success, building robust geopolitical risk management organizations and processes is key to begin navigating an uncertain world. The firm serves financial institutions, private equity . Complying with anti-money laundering and anti-bribery and corruption regulations. 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. But the discussions often focus on a specific investment, project, or market entry or exit. 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. 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. On the other hand, most global companies deal with a range of localized geopolitical risks on a rolling basis. CFOs' assessments of the economy in Q3. 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.. 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. They may have to balance, given the risks, near- and long-term market priorities. Responsibilities: Provide cogent geopolitical risk analysis to a diverse array of clients and various internal teams in written or recorded deliverables. Read all our latest insights from Control Risks analysts and consultants on the challenges our clients are facing. Thank you! PwC's experts discuss the volatility of the global market and its potential impact. Our geopolitical risk intelligence solutions provide end-to-end coverage of political, violent, sovereign, banking and investment risk worldwide. We support each client's unique risk profile . 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. Related Expertise: In volatile times such as these, a companys instinct is to focus on defenseto protect the business from harm. 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.. With tectonic shifts in geopolitics rumbling from Chinas reemergence on the global stage, a climate crisis, and the Fourth Industrial Revolution, companies must be on guard. Channeling the policy debates under way in the European Union, 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. "speed": 600, (2019). Holistic-risk evaluators have the most highly developed geopolitical risk management operations. Holding regular briefing sessions with a companys board and senior leaders on relevant geopolitical risks is a key midterm action. Industries that are positively exposed to geopolitical risks suffer a decline in investment that is larger than the aggregate effect. Obtain the data you need to make the most informed decisions by accessing our extensive portfolio of information, analytics, and expertise. ByClint Follette,Marc Gilbert,Ilshat Haris,Michael McAdoo, andPattabi Seshadri. 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. 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, { Any copying or distribution of Eurasia Group materials is prohibited. Boston Consulting Group partners with leaders in business and society to tackle their most important challenges and capture their greatest opportunities. Provide cogent geopolitical risk . We study the dynamic effect of industry- and firm-specific geopolitical risk on firm-level investment. As a result, the company was able to significantly expand its cloud business and gain advantage over competitors that were slower to act. Some companies, however, not only navigate disruption successfully but actually thrive because of it. BCG X disrupts the present and creates the future by building bold new tech products, services, and businesses. 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. Sign in to the product or service center of your choice. In a global business environment characterized both by hypercompetition and intensifying geopolitical headwinds, it is no longer enough for companies with global footprints to only react defensively. 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. Utilize our expert insight and data to get risk scores tailored to your specific metrics, Benchmarking, Pricing and Aggregation, and Scenario Analysis One Western energy company, for instance, credited the skills and transparency of its government relations staff for being able to operate simultaneously in two Middle Eastern nations despite strong political tensions between the two governments. Companies are walking a geopolitical tightrope. 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