A confirmation email has been sent to you. Every organization we studied relies on input and expertise from the field. For decades, companies built their . Some of these political consulting clients include: Airbnb. The ability to proactively navigate turbulence can mean the difference between prospering through a crisis or falling victim. Reporting focuses on both incident analysis and trend monitoring, providing forward looking assessments to facilitate proactive risk management decision making and asset . Idiosyncratic geopolitical riskconstructed using the transcripts of firms' earnings calls, and Provide cogent geopolitical risk . Nowhere is the fallout from current geopolitical tensions more apparent than the unfolding competition between China and the United States. Today, the company has offices in New York, Washington, and London, as well as a network of experts and resources around the world. Business strategy and operational efficiency require constant evaluation in a complex and often volatile environment. 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. Putting politics first since 1998. Most companies do not have a dedicated team of full-time employees devoted to geopolitical risk management. 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. Geopolitical Intelligence Group (GIG) is a leading provider of intelligence services, offering strategic and operational insights into the complex geopolitical environment that affects businesses. Enter your username or email to reset your password. 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 . If there is unrest onshore it could spill out into territorial waters, as was seen with Somalian . 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. The value of being able to anticipate, synthesize, and harness risk for potential gain has never been greater. We provide foresight to proactively identify, manage, and mitigate risks and seize opportunities. Tailored, high-impact executive workshops, Speaking engagements and macro strategy conversations. Any discussion of such potentially existential issues must start at the top. Obtain the data you need to make the most informed decisions by accessing our extensive portfolio of information, analytics, and expertise. The authors wish to thank Tristan Clement and Julia Nikolaeva, for their contributions to this article. These organizations take many forms. 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. 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. Marcin Grajewski, The EU strategic autonomy debate: What think tanks are thinking, European Parliament Think Tank, March 30, 2021, europarl.europa.eu. Leaders face an uncertain landscape. Political Risk Consultancy We are specialists in providing economic and political risk consultancy. The businesss board can apply a materiality test to pinpoint what it should dedicate time to discussing. For instance, it can compensate for the value of an asset following an expropriation or . 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 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. Geopolitical forces at work in the economy. 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. Adept & highly organized self-stater. 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. Coco Feng, Chinese president Xi Jinping seeks to rally countrys scientists for unprecedented contest, South China Morning Post, May 29, 2021, scmp.com. . 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. 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. Cultural Missteps This website uses cookies. 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. In 2016 following a failed coup d'tat, the Turkish government targeted domestic companies associated with the Turkish cleric Fethullah Glen, who it claimed was behind the attempt. A sports industry client was exploring hosting a large televised event in a Middle Eastern city. Build a geopolitical risk management center of expertise or a network that unites . 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. 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.. Whats more, the COVID-19 pandemic has brought geopolitical risk factors into sharp relief. your toughest business challenges, Government professionals 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. Any investment in taxable fixed-income securities is subject to certain risks, including credit risk, interest-rate risk, foreign risk, and currency risk. Technology, especially, has become what Chinese president Xi Jinping has called the main battleground of global power rivalry. Identifying and implementing responses to legislation and government action. BCG was the pioneer in business strategy when it was founded in 1963. 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. Human Rights Violations Case Study 1 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. An escalation of geopolitical events can lead to outright wars . 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. Australia. (See Exhibit 1.) SVA ( www.stevevickersassociates.com) is a specialist international risk mitigation, corporate intelligence and risk consulting company. 4 Stress in global financial markets is significant. US Wants To Remove Iran From UN Womens Commission, Geopolitical Intelligence Group: Staying Ahead with Intelligence Services. Others may opt to identify as global entities because of the access it accords them to pursue business opportunities in emerging markets. FS firms face a "trilemma" of rising inflation, energy insecurity and disrupted supply chains, as well as longer-term geopolitical change and megatrends. Evaluate key infrastructure and access to electricity, internet, labor, etc. 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. Thank you! 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. Such a test would include a time frame for execution and possible technical options. 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. 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. Part of managing geopolitical risk is considering the ramifications of a companys core narrative. Ian Bremmer is the president and founder of Eurasia Group, the leading global political risk research and consulting firm started in 1998. According to the World Economic Forum in its 2023 Global . being employed directly by an oil firm or airline . The other stream is to work for such client companies directly, in an "in-house" role - i.e. 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. Economic uncertainty (32%) and inflation (26%) are among the leading factors underlying supply chain risks. "arrows": false, As a management consultant, Dr. Smith has worked for PA Consulting Group . 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. Prudent geopolitical risk management also requires understanding how to deal with issues that cross borders. 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. 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. Economic and Geopolitical scenarios BCG X disrupts the present and creates the future by building bold new tech products, services, and businesses. Each event carries it own risks, and each risk its own consequences. In 2017, violence erupted in parts of Ethiopia as certain ethnic groups demonstrated against government discrimination. Casper Wuite, 55 East 52nd Street 17 Fl Country risk mapping. One consumer packaged goods company we studied has developed a strong knowledge-sharing culture among functional networks. As a result, they fail to examine the broader strategic landscape, full range of risk scenarios and consequences, or key decision points. iStrategic LLC is a Political Risk Analysis and Consulting firm specializing in the Middle East and North Africa region. 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. 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