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. A compact could include a traffic-light-style warning system with red, yellow, and green lights that represent escalating risk levels. Sydney Olympic Park NSW 2127 Geopolitical Risk and uncertainty are major challenges for business operations and frequently listed among the top three risks in major corporate C-suite surveys. New York NY 10055. . Companies with robust compliance programs should consider conducting geopolitical risk assessments as part of their regular due diligence workflows. Our operational and strategic advisory services inform our clients with valuable . Boston Consulting Group is an Equal Opportunity Employer. Country risk mapping. 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. 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. 2. Sorry, something went wrong. 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. 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. Integrate geopolitical signals and risk assessment into strategic-planning processes and define actionable strategies to both protect the business and take advantage of emerging opportunities. Managing geopolitical risk. Read all our latest insights from Control Risks analysts and consultants on the challenges our clients are facing. Political risk monitoring. The decoupling of the US-Chinese tech sector is already disrupting bilateral flows of technology, talent, and investment. Whats their secret? 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. 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. Operations in countries with poor human rights records can cause supply chain disruptions but can also lead to reputational damage and give rise to class action lawsuits, public boycotts or stockholder divestment campaigns. "Heightened political risk globally raises the threshold for unrest, with implications for shipping, such as the ability to secure crews and access ports safely. While there is no universal formula for success, building robust geopolitical risk management organizations and processes is key to begin navigating an uncertain world. In . Part of managing geopolitical risk is considering the ramifications of a companys core narrative. When retaining consultants, always consider the necessary types of insurance to be required. Adaptive artificial intelligence combined with localised geopolitical risk expertise from Control Risks. Some companies, however, not only navigate disruption successfully but actually thrive because of it. Not surprisingly, several oil and gas companieswhich often make large, long-term investments in high-risk countries amid frequently shifting environmental-protection policiesfall in this category. 5 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. MAX's Geopolitical Intelligence Services knows your part of the world because we're part of it too. Managing volatility requires an understanding of the impact on business, customers and environment. 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. The Position . 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. We provide customized information services, including strategic&competitive intelligence, market research, risk management and industrial analysis. 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. 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. Geopolitical shifts and technology changes are transforming international trade, creating both risks and opportunities for companies that can navigate this new environment. 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. With geopolitical risk on the rise in advanced economies, the house view on opportunity in markets such as the US, the UK, and China has become elusiveand boards and management teams are often divided on where to invest or allocate capital for long-term growth. Sophisticated geopolitical risk management can also help investors identify arbitrage opportunities. As part of long-term planning, a company can conduct exercises to assess its response to game-changing scenarios. From project or investment selection, through market entry and ongoing risk monitoring and management, we can support you with actionable intelligence, business relevant forecasts, and tailored solutions. Geopolitical risk is the number one global corporate risk. On the other hand, most global companies deal with a range of localized geopolitical risks on a rolling basis. Business strategy and operational efficiency require constant evaluation in a complex and often volatile environment. 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. And a narrative that works in one place could inhibit market opportunities in another or create sensitivities among regions. Global geopolitical risk and economic uncertainty have increased dramatically over the past decade, according to leading indices. Political risk consulting firms. World Path Consulting San Francisco, CA Quick Apply Remote. Unstable regimes or upcoming elections may also pose a risk as potential new governments may have unfavorable views towards certain foreign firms. Subscribed to {PRACTICE_NAME} email alerts. Independent data and analysis for opportunity sizing, local partner selection, government stakeholder assessment and risk assessment. 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. 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. Organizations can be prepared to respond to geopolitical risks across multiple time frames. This could suggest CROs view this area as continuing to carry business importance but believe that the pace and scale of political change may be slowing.. 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. 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. Comprehensive spectrum of risk-based screening and due diligence solutions. Creating risk management strategies through deep industry expertise, advanced analytics, and specialist global knowledge to help you optimize your business. Part of managing geopolitical risk is considering the ramifications of a companys core narrative. Leverage unparalleled Global Trends 2040: A more contested world, US National Intelligence Council, March 2021, dni.gov. {"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. Economic and Geopolitical scenarios Meanwhile continuing shortages of raw materials (39%), logistics and warehousing (35%) and components (33%) are all . They may have to balance, given the risks, near- and long-term market priorities. A client operating in the entertainment industry was seeking to incorporate in a foreign jurisdiction from which it would base its regional activities. In 2017, France started mandating large French companies to conduct human rights due diligence, requiring them to establish and publish corporate vigilance plans to prevent adverse human rights impacts. Our privacy policy describes how your data will be processed. The Geopolitical Analyst (remote) will work closely with our teams to support research and analytical duty upon clients' needs. "fade": true, Supporting the growth of Control Risks' Embedded & Security Consulting practices throughout APAC. Leaders can cultivate cohesiveness by bringing key stakeholders to the table to share views on a given engagement or project. 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. CFOs' assessments of the economy in Q3. Case Study 1 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. Geopolitical forces at work in the economy. Holistic-risk evaluators have the most highly developed geopolitical risk management operations. Please try again later! 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. The bank also attributed $120 million of a $524 million trading loss during the first quarter to its role as one of the counterparties in a short trade by Chinese metals group Tsingshan that went south amid the market turmoil that followed the outbreak of war. Flows of technology, talent, and investment of it and opportunities companies..., March 2021, dni.gov protect the business and take advantage of emerging opportunities multiple time frames, Quick... On business, customers and environment the risks, near- and long-term market priorities latest! Both protect the business and take advantage of emerging opportunities the number one global risk... Some companies, however, not only navigate disruption successfully but actually because. 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