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. Political Risk Consultancy We are specialists in providing economic and political risk consultancy. To gain a deeper understanding of the geopolitical risk management practices of global companies, we conducted structured interviews with current and former senior executives of large organizations, with various headquarters locations, in ten diverse industries. Stay connected with us and get all latest updates. One energy company, for example, established a country chair position, which is typically assigned to the most senior business executive in a given country and is seen as a prestigious step toward advancement to top management. Forecasting government action and decisions. "dots": false, 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. For many companies, the strategic competition between China and the United States will top the list of standing risk issues to discuss. Such a test would include a time frame for execution and possible technical options. . Geopolitics is "the study of the effects of Earth's geography (human and physical) on politics and international relations.". We provide customized information services, including strategic&competitive intelligence, market research, risk management and industrial analysis. Eurasia Group analysts leverage deep country and thematic expertise with quantitative methodologies to forecast fast-moving risks and opportunities. 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.. Something went wrong. Nowhere is the fallout from current geopolitical tensions more apparent than the unfolding competition between China and the United States. Each event carries it own risks, and each risk its own consequences. We found that there is no uniform approach to geopolitical risk management. Financial risks have probably never been more acute. Quantifying return on advocacy is difficult, however. Transparent econometric modeling and scenarios with inputs ranging from economic policy to political upheaval to industry turmoil. Nonetheless, the results highlighted the need for banks to embed political analysis into risk-based decision-making. We call these archetypes holistic-risk evaluators, risk entrepreneurs, systemic-risk managers, and nascent-risk managers. Large US banks were not alone in underestimating the determination of Russian president Vladimir Putin to ignite the biggest European conflict since World War II. 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. Political risk advisory Our ability to combine leading political expertise with timely and actionable insight for clients is at the core of our value. Odyssey is a geopolitical consultancy trained to assist you in understanding sensitive geopolitical issues. 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. 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. Those risks could include securing operations and people amid political instability, ensuring that they comply with evolving local regulations in one market, and staying abreast with human-rights considerations in another. Experienced in political affairs, non-profits, articles and blogs, with demonstrated skills in research and analysis on politics, policy, and history. Industries that are positively exposed to geopolitical risks suffer a decline in investment that is larger than the aggregate effect. Already a member? The two countries account for 76 of the worlds 100 most valuable companies. Long-term planning can also cover such issues as the following: For both internal and external stakeholders, walking a geopolitical tightrope may cause leaders to redefine how they think about and position their companies. However, it added, "only a subset of chief risk officers (CROs) recognize this." and local cultural climates (local perceptions of foreign operators, uncertainty ahead of elections or regime change, etc.). Holistic-risk evaluators have the most highly developed geopolitical risk management operations. Many company boards already deliberate geopolitical risks to one degree or another. Independent data and analysis for opportunity sizing, local partner selection, government stakeholder assessment and risk assessment. FS firms face a "trilemma" of rising inflation, energy insecurity and disrupted supply chains, as well as longer-term geopolitical change and megatrends. One short-term action that a company can take is establishing a crisis-response unit to take the lead on identifying potential risks and developing mitigation strategies. If political risk has hurt your company, political risk insurance can help mitigate the financial cost. {"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. Geopolitical risk monitoring Read more Read less Comprehensive monitoring of physical security and regulatory challenges facing business operations in any country and globally. 4. Our intelligence team works with regional field ops who know every corner of the . BCG's international trade consulting experts help companies make the right movesand mitigate riskto unlock competitive advantage. Comprehensive spectrum of risk-based screening and due diligence solutions. "arrows": false, Coco Feng, Chinese president Xi Jinping seeks to rally countrys scientists for unprecedented contest, South China Morning Post, May 29, 2021, scmp.com. Economic uncertainty (32%) and inflation (26%) are among the leading factors underlying supply chain risks. 08 March 2022. 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. 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. being employed directly by an oil firm or airline . For instance, it can compensate for the value of an asset following an expropriation or . 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. Understand counterparty risk with forward-looking analysis of reputational, legal and political risks associated with new or existing partners, Risk Quantification Meanwhile continuing shortages of raw materials (39%), logistics and warehousing (35%) and components (33%) are all . Global geopolitical risk and economic uncertainty have increased dramatically over the past decade, according to leading indices. The firm's new geopolitical advisory team is being launched as multinational corporations grapple with volatile events around the world, from Russia's invasion of Ukraine to simmering tensions. Geopolitical Risk – What Is It and How Can Companies Respond To It? Conduct time-efficient international policy monitoring and updates. As a result, they fail to examine the broader strategic landscape, full range of risk scenarios and consequences, or key decision points. We offer a unique combination of advanced analytical methods and an innate understanding of intelligence gathering other security sources don't possess. 2023 Kroll, LLC. Boston Consulting Group analysts insist that playing defense is a losing strategy when it comes to geopolitical risks. (See Exhibit 2.). One way to initiate a more strategic approach is by assessing the risks that matter the most to a business. 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. 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. 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. In volatile times such as these, a companys instinct is to focus on defenseto protect the business from harm. 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. They should regularly look up from tending to the immediate needs of their operating environments to learn, adapt, and prepare for external and internal shocks and pressures. Evaluate key infrastructure and access to electricity, internet, labor, etc. 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. 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. Unstable regimes or upcoming elections may also pose a risk as potential new governments may have unfavorable views towards certain foreign firms. Such external pressures exert other internal pressures on corporate leaders. Site by Odgis+Co and ICVM Group. The 16th edition of the Global Risks Report, published by the World Economic Forum with support from Marsh McLennan, highlights the disruptive implications of major risks, including the COVID-19 pandemic, that may reshape our world in 2021 and over the next decade. Adaptive artificial intelligence combined with localised geopolitical risk expertise from Control Risks. The firm serves financial institutions, private equity . Sign up to receive periodic news, reports, and invitations from Kroll. In 2017, violence erupted in parts of Ethiopia as certain ethnic groups demonstrated against government discrimination. A board could begin such a conversation with a baseline assessment that includes the following: Boards can gain perspective by soliciting outside opinions on relevant topics from business and political leaders, embassies and other government agencies, and nongovermental organizations. The survey, conducted with the Institute for International Economics, was taken before the crisis in Ukraine, so now CROs may be taking a different view. A large organization is likely to have stakeholders with differing cultural reference points and opinions on issues such as human rights and privacy. Unfortunately, geopolitical risk commonly is misunderstood by the 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. 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. 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