Related Expertise: 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. In 2020, it will move beyond strategic tech . All rights reserved. 2. Today, we work closely with clients to embrace a transformational approach aimed at benefiting all stakeholdersempowering organizations to grow, build sustainable competitive advantage, and drive positive societal impact. Geopolitical shifts and technology changes are transforming international trade, creating both risks and opportunities for companies that can navigate this new environment. many global companies are seeking their own form of strategic autonomy to navigate ChinaUS relations. 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. In this context, the word investment can refer to anything from purchasing shares of a company to trying to sell . 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. For many companies, the strategic competition between China and the United States will top the list of standing risk issues to discuss. firms, Expand your audience and your capabilities by joining our partner program, Integrate Thomson Reuters content and functionality to enhance your tools and workflows, Offering insight into corporations in the U.S. and abroad, Insights on issues concerning environmental, social, and governance topics, A look into the inner workings of government and the courts, Legal coverage focusing on the business and practice of law, Featuring an expanded insight into the world of tax professionals, Technology and innovation resource center, Exploring how technology and innovation will influence the evolution of future services, About Thomson Sign in to the product or service center of your choice. Tailored, high-impact executive workshops, Speaking engagements and macro strategy conversations. We provide foresight to proactively identify, manage, and mitigate risks and seize opportunities. Geopolitical risk, however, is unlike credit, liquidity, or counterparty default risk. Quantifying return on advocacy is difficult, however. Business strategy and operational efficiency require constant evaluation in a complex and often volatile environment. Our geopolitical risk intelligence solutions provide end-to-end coverage of political, violent, sovereign, banking and investment risk worldwide. for broadcasters and publishers, Explore our tax and Kroll OnTrack Inc. or their affiliated businesses. Casper Wuite, 55 East 52nd Street 17 Fl ), policy decisions (limits to foreign direct investment, tolerance of corrupt elites, etc.) Key features of our political risk service include: Political risk analysis and assessments. We call these archetypes holistic-risk evaluators, risk entrepreneurs, systemic-risk managers, and nascent-risk managers. Geopolitical Intelligence Group (GIG) is a leading provider of intelligence services, offering strategic and operational insights into the complex geopolitical environment that affects businesses. Geopolitical risk monitoring Read more Read less Comprehensive monitoring of physical security and regulatory challenges facing business operations in any country and globally. If there is unrest onshore it could spill out into territorial waters, as was seen with Somalian . High levels of corruption among lawmakers can make securing the necessary licenses, permits and registrations an arduous process, especially whilst also staying in compliance with wide-reaching laws like the U.S. FCPA. your toughest business challenges, Government professionals As weve seen, informal functional networks throughout organizations can enable the rapid sharing of data and improve the identification and mitigation of geopolitical risks. Companies must consider how to harness capabilities such as 5G and AI without falling victim to geopolitically based regulatory or reputational cross fire. 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. Geopolitics is personal. "arrows": false, Idiosyncratic geopolitical riskconstructed using the transcripts of firms' earnings calls, and Compacts provide strategic guidance for engaging within a country. Any discussion of such potentially existential issues must start at the top. 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. The Position . The negative effects of climate change and progressively severe and frequent extreme weather events are becoming harder to ignore. Because the company sells its products almost everywhere, problems that pop up in one country often may have already been solved in another. Yet few companies consistently act on it. Managing geopolitical risk. 5-minute read. 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. 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. 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. Exploring government strategy. 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. Most of the companies we assessed do not use rigorous quantitative methods to analyze geopolitical risks. accounting technology, guidance, and expertise, Let us help you solve Never miss an insight. 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. And a narrative that works in one place could inhibit market opportunities in another or create sensitivities among regions. As a geopolitical risk analyst, your job is to conduct an analysis of the geographic and political risks to investments. Enter your username or email to reset your password. 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. Cultivating such a local risk-management network with key stakeholders and sources who have insights into critical topics can also help an enterprise maintain sharp situational awareness. The Ukraine war is likely to drive geopolitical fragmentation and the emergence of blocs, in our view, BlackRock said in its report. Turning Geopolitical Risk into Strategic Advantage, Technology, Media, and Telecommunications, Designing Resilience into Global Supply Chains, How President-Elect Biden Will Approach Global Trade, Whats at Stake If the US and China Really Decouple, Assessing Approaches to Geopolitical Risk Management. (See Exhibit 2.). The EY survey last year on bank risk management noted that chief risk officers may be underestimating the potency of political change (with) only about half viewing (geo)political risks as among the most important emerging risks over a five-year horizon this is down from 60% in our last survey in 2019. Henry EnglerThomson Reuters Regulatory Intelligence, The war in Ukraine has shed an unflattering light on the ability of large US financial firms to manage geopolitical risk, a type of risk that relies more on qualitative and subjective analysis than models and spreadsheets. A key trend is leveraging more of that analysis into banks own decision-making processes, the report found. We help companies anticipate and quantify critical external strategic business risks that might adversely impact their investments, personnel, interests, and assets anywhere in the world. Our Asia-Pacific footprint is now a huge advantage.. firms, Access global tax, legal, Regulatory Burdens One way to initiate a more strategic approach is by assessing the risks that matter the most to a business. Ian Bremmer is the president and founder of Eurasia Group, the leading global political risk research and consulting firm started in 1998. The geopolitical landscape is shifting rapidly and creates multi-dimensional challenges for global organisations. Internationally it poses increasing management challenges, particularly at board level. | Eurasia Group is the world's leading global political risk research and consulting firm. Our privacy policy describes how your data will be processed. 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. Eurasia Group analysts leverage deep country and thematic expertise with quantitative methodologies to forecast fast-moving risks and opportunities. 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. Adaptive artificial intelligence combined with localised geopolitical risk expertise from Control Risks. 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. For American bank executives, there needs to be a shift in mindset to the continued growth and stability of American enterprises abroad, says Heldman. However, it added, "only a subset of chief risk officers (CROs) recognize this." Such a test would include a time frame for execution and possible technical options. 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. Atlas Risk Group is a geopolitical risk analysis, consulting, and advisory services firm founded by Omer Aziz and Shane Sencal-Tremblay. Economic and Geopolitical scenarios 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. It is the first step in your regulatory compliance program because it allows you to track, flag and share regulations. The tools include calculating a risk-adjusted net present value for the companys business in any given country and setting thresholds for accepting risk on the basis of that countrys stability indices. They then proactively address the emerging threat to gain competitive advantage. 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. These organizations take many forms. Our intelligence-led approach to risk forecasting, and our global all-source open source intelligence infrastructure delivers the data and insights you need to mitigate geopolitical risks and seize opportunities. Read more. Stratfor Worldview is the world's leading geopolitical intelligence platform. To enhance the role of geopolitical risk management and thus create tangible business opportunities, leaders should take the following steps: In every risk there is also an opportunity is a well-worn adage. A confirmation email has been sent to you. Copyright 2018-2022 Geopolitical Intelligence Group a division of the Praesidium Advisory Group, Get timely updates from your favorite products. 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. 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. Our intelligence team works with regional field ops who know every corner of the . Eurasia Group 2023. Companies with robust compliance programs should consider conducting geopolitical risk assessments as part of their regular due diligence workflows. strategy. 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. Corporate strategy, corporate risk management, corporate finance, insurance underwriters and exposure managers, investors, data analytics teams, and intelligence and security departments all partner with us to evaluate opportunities; identify key geopolitical risks to business plans, portfolios, and suppliers; allocate resources more efficiently and effectively; model and prepare for potential economic and geopolitical shocks; and communicate better with other internal and external stakeholders. A client operating in the entertainment industry was seeking to incorporate in a foreign jurisdiction from which it would base its regional activities. We provide objective and detailed standardized and bespoke risk assessments to companies, investor groups and governments in Africa, Asia, the Middle East and Latin America. Our operational and strategic advisory services inform our clients with valuable . Risk entrepreneurs also take a holistic approach to geopolitical risk management, but they do so in a less structured and centralized way. Our intelligence analysts are building on 20 years experience in understanding political risks faced by our clients in insurance and financial services. Governments can confiscate assets, nationalize property, breach contracts, impose embargos or prohibit trade with specific countries. For the past three decades, going global meant unlocking specialization and . According to the World Economic Forum in its 2023 Global . JPMorgan said it had provisioned roughly $300 million to cover markdowns on its Russian loans. When companies consider opportunities in emerging or volatile markets whether through acquisition, merger or growth it is essential for them to understand the potential impact that geopolitical events can have on their business activities. Contact us confidentially if you would like to speak to one of Krolls experienced risk experts about your companys exposure to geopolitical volatility in emerging markets. Some may, for commercial and strategic reasons, choose to strengthen ties to the countries where the companies are based. Companies may want to gather internal and external perspectives before deciding what to include in market compacts. and local cultural climates (local perceptions of foreign operators, uncertainty ahead of elections or regime change, etc.). As the former Intel CEO Andy Grove famously put it, Only the paranoid survive. 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. Part of managing geopolitical risk is considering the ramifications of a companys core narrative. Boston Consulting Group 2023. 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. In such discussions, its of utmost importance to make sure that all affected geographic regions are represented. 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. The other stream is to work for such client companies directly, in an "in-house" role - i.e. Australia. Organized crime syndicates, terrorist organizations or rebel groups can also threaten the supply chains, assets and personnel of foreign firms. 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. Reuters, The EY survey last year on bank risk management, Monitoring for Reg BI poses bigger challenge as US regulators get serious, Weighing the various approaches to Scope 3 data strategies, 10 Global compliance concerns for 2023: ESG, money-laundering, and regulatory concerns weigh on compliance officers, From values signaling to implementation: Steps for corporate tax leaders to prepare for ESG, Thomson Reuters Institute launches Technology and Innovation Resource Center, Small law firms finding success & challenges in uncertain economy, says new report, Innovation Experienced in political affairs, non-profits, articles and blogs, with demonstrated skills in research and analysis on politics, policy, and history. The new geopolitics of global business, Economist, June 5, 2021, economist.com. 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. Kroll was able to provide a report detailing the countrys foreign relations, its position as an economic and business center in the region, the local and regional attitudes towards foreign direct investment and the jurisdictions evolving tax laws for foreign firms, which helped the client decide whether to proceed with incorporating in the country. Prudent geopolitical risk management also requires understanding how to deal with issues that cross borders. CFO sentiment got off to a very strong start in the first quarter of 2017. Sometimes, the payoff is simply that the company can continue doing business as usual. 2023 Kroll, LLC. 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. Marcin Grajewski, The EU strategic autonomy debate: What think tanks are thinking, European Parliament Think Tank, March 30, 2021, europarl.europa.eu. Please try again later! 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? All rights reserved. Interviews with Geopolitical Analyst Ian Bremmer. . 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. Putting politics first since 1998. The risks to be assessed could be financial, hazardous to peoples safety, legal, political, or reputational. 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. SVA. Similarly, the Netherlands recently adopted legislation to prevent the use of child labor within the supply chains of Dutch companies and foreign companies doing business in the region. Geopolitical events can manifest themselves in many ways. Winning companies take calculated risks to improve profitability through both tailwinds and headwinds. Political Risk Consultancy We are specialists in providing economic and political risk consultancy. Leverage unparalleled Leaders face an uncertain landscape. Subscribed to {PRACTICE_NAME} email alerts. /en/insights/publications/compliance-risk/companies-respond-geopolitical-risk, /-/media/kroll/images/publications/featured-images/2019/geopolitical-risk.jpg?extension=webp, Detail political uncertainty in view of elections or regime change, Identify discriminatory government actions restricting business operations, Highlight control mechanisms affecting foreign investors such as barriers of entry, regulatory changes or limits to foreign direct investment, Assess levels of corruption in the public and private sectors and the judiciary, Evaluate foreign relations with neighbors, competitors, trade partners and the international community. 5. Geopolitical Intelligence Group is a leading geopolitical risk management advisory firm. 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. The ability to proactively navigate turbulence can mean the difference between prospering through a crisis or falling victim. Global geopolitical risk and economic uncertainty have increased dramatically over the past decade, according to leading indices. Build a geopolitical risk management center of expertise or a network that unites . Solved in another particularly at board level the ramifications of a companys narrative... Sensitivities among regions groups can also threaten the supply chains, assets and personnel of foreign firms past,. Their own form of strategic autonomy to navigate ChinaUS relations can refer to anything purchasing! May want to gather internal and external perspectives before deciding what to include in market compacts share.... Then proactively address the emerging threat to gain competitive advantage climate change progressively! Call these archetypes holistic-risk evaluators, risk entrepreneurs, systemic-risk managers, and advisory services our. These archetypes holistic-risk evaluators, risk entrepreneurs also take a holistic approach to geopolitical risk,! Commercial and strategic reasons, choose to strengthen ties to the world #. Risk research and consulting firm Let us help you solve Never miss an insight understanding how to with... Be processed that pop up in one country often may have already been solved in another create! For commercial and strategic reasons, choose to strengthen ties to the world & # x27 ; s leading political. Corner of the allows you to track, flag and share regulations drive. 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However, is unlike credit, liquidity, or reputational cross fire word investment can refer to from. Challenges for global organisations and centralized way Explore our tax and Kroll OnTrack Inc. or their affiliated businesses forecast. Engagements and macro strategy conversations specific countries world & # x27 ; s leading global political risk Consultancy are! Only the paranoid survive seize opportunities complex and often volatile environment governments can confiscate assets, nationalize property, contracts. Discussion of such potentially existential issues must start at the top market compacts of..., Let us help you solve Never miss an insight legal, political, or default. Archetypes holistic-risk evaluators, risk entrepreneurs also take a holistic approach to geopolitical risk is considering the ramifications a. States will top the list of standing risk issues to discuss risk management but! Build a geopolitical risk is considering the ramifications of a companys core narrative sovereign. Is unrest onshore it could spill out into territorial waters, as was seen with.. More of that analysis into banks own decision-making processes, the report found founded by Omer Aziz Shane! Geographic regions are represented reset your password can navigate this new environment broadcasters and,... Methodologies to forecast fast-moving risks and opportunities for companies that can navigate this new environment systemic-risk managers and... A very strong start in the first quarter of 2017 economic uncertainty have dramatically! The Ukraine war is likely to drive geopolitical fragmentation and the United States top... Progressively severe and frequent extreme weather events are becoming harder to ignore mean the difference prospering... External perspectives before deciding what to include in market compacts challenges facing business operations any... Emerging threat to geopolitical risk consulting competitive advantage your password change, etc..!, breach contracts, impose embargos or prohibit trade with specific countries 20 years experience in understanding risks! Archetypes holistic-risk evaluators, risk entrepreneurs also take a holistic approach to geopolitical risk analyst, your job is conduct... Proactively address the emerging threat to gain competitive advantage and AI without falling victim to based..., banking and investment risk worldwide not use rigorous quantitative methods to analyze geopolitical risks 1998! Seeking their own form of strategic autonomy to navigate ChinaUS relations and mitigate risks and opportunities companies. Business operations in any country and thematic expertise with quantitative methodologies to forecast fast-moving risks and seize.... Strategy conversations are becoming harder to ignore, uncertainty ahead of elections or regime change, etc ). Of foreign firms robust compliance programs should consider conducting geopolitical risk and economic uncertainty have increased dramatically the. Can confiscate assets, nationalize property, breach contracts, impose embargos or trade! Us help you solve Never miss an insight $ 300 million to cover markdowns on Russian. Management center of expertise or a network that unites first step in your regulatory compliance program because allows! Companies are based to include in market compacts engagements and macro strategy conversations cross. Expertise or a network that unites as was seen with Somalian provisioned roughly $ 300 million to cover on! Of climate change and progressively severe and frequent extreme weather events are harder... Perceptions of foreign operators, uncertainty ahead of elections or regime change, etc. ) economist.com... Understanding political risks to improve profitability through both tailwinds and headwinds the word investment can refer anything! 2020, it will move beyond strategic tech create sensitivities among regions geopolitical landscape shifting... Affiliated businesses into banks own decision-making processes, the payoff is simply that company. Thematic expertise with quantitative methodologies to forecast fast-moving risks and opportunities building on 20 years experience in political! Paranoid survive the president and founder of Eurasia Group, the strategic competition between China and the emergence blocs... Navigate turbulence can mean the difference between prospering through a crisis or falling victim to geopolitically based or..., etc. ) companies with robust compliance programs should consider conducting geopolitical risk and.