Getting geopolitical: Key issues to follow and actions to take

I was born in 1979. I lived most of my life in an unprecedented period of “long peace”. This used to be the period since 1945 which was marked by the absence of major wars between the great powers.  

“Long peace" is not here anymore. We have entered a new period of heightened military escalations, political, economic and climate-related international tensions. Businesses must take notice. 

While you may not want to get political, you can develop mechanisms to track and adapt your strategy. You will find key issues to follow and actions to take to become more resilient organization despite the mounting geopolitical complexities.

Key issues to track in 2024 and for a forward outlook to 2030

• US-China relations : Follow US-China relations in trade, technology. Look for changing geopolitical influence and differences in global positioning. 
• Russia-Ukraine conflict and Russia’s global positioning : Follow the continuing armed conflict and its implications for energy and food sectors specifically. Understand implications for Eastern Europe and the European Union.
• Situation in the Middle East :  Follow escalation in military confrontation between Israel, its neighbors and involvement of Iran.
• Cybersecurity tensions : Follow use of cybersecurity for military means, including emerging use of AI and quantum technology.
• Economic shocks and their consequences :  Track implications of inflation, supply chain disruptions and financial crisis on countries that are key to your business.
• Climate change and its consequences : Track extreme weather events, changes in the use of natural resources and migration.
• Global governance : Overall track instability in the global governance, its institutions (e.g. UN, World Bank, etc.) and new emerging multinational initiatives (e.g. BRICS)

Is de-risking possible?

While you can't control fully your external environment, you may reduce exposure and increase readiness to react in case of unpredictable situations stemming from geopolitical developments.

The following are (some) examples of initiatives that you may consider to implement within your business to increase your organisation's resilience.

• Supply chain : Mapping out your supply chain geographically and in relation to geopolitical risks. As required, you can diversify your suppliers list. 
• Scenario planning : Creating scenarios based on different geopolitical scenarios using  your country/regional hotspots. Consider that nothing is impossible.
• Geopolitical intelligence : Sourcing and tracking geopolitical intelligence. Assign the role in your team and regularly get updates on their findings.
• Cybersecurity : Understanding your exposure, develop and execute a strategy that will increase your cyber resilience.
• Sustainability & ESG : Understanding the frameworks, your current and future compliance requirements and where you have an opportunity for value creation from a corporate and portfolio perspective.

What else?

A resilient business is a solid foundation for long term prosperity. The integration of environment, social and overall governance considerations is embedding that resilience on a systemic basis rather than relying on external factors. While business can't (fully) control geopolitics and regulatory developments, business can control its internal environment and its capabilities. 

The actions to take in a period of heightened international tensions are internal.

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Resources

ESG is missing a metric: R for resilience

Fostering long-term resilience through a dynamic approach to ESG risk management