I met company leaders to discuss business risks. Here's what they told me.

In my discussions with our entrepreneur clients, two major threats often come up: geopolitics and financial crises. I therefore hosted a scenario planning event to help them identify warning signs and triggers for financial and political instability. We also assessed the strengths and weaknesses of economies around the world to find where a future financial crisis might come from. 

The event took place in London's Churchill War Rooms and included entrepreneurs from across the world. All of them are members of our Industry Leader Network, a network of clients who own and operate private businesses. The two separate simulations were guided by John Hulsman, former Washington DC insider and foreign policy expert.

The industry leaders debated two scenarios based on the business threats previously cited:

• Will Europe remain governable? Here, we debated and tested how a chronological series of events could unfold over the next two years and if these events could lead to political chaos in Europe.
• Where will the next financial crisis come from? In groups covering major regional economies, participants debated the strengths and vulnerabilities of each region. The business leaders offered their personal experience operating in these regions to illuminate new factors that could lead to, or prevent economic destruction. 

Regarding the geopolitical points, they concluded the following:

Refugee flows from the Middle East to European borders are likely to persist. Even if the war in Syria ends, the country's history of instability, the high possibility of more violence and the lack of opportunities mean citizens will likely continue to seek refuge in Europe.

The EU-Turkey refugee deal will take on increasing importance in this context. Our clients questioned the strength of the deal and concluded it is likely to collapse, on the grounds that the EU will not bow to escalating Turkish demands.

If the deal collapses soon, it could lead to over 1 million migrants entering Germany in 2017, an election year. If Germany experienced an influx of migrants, Chancellor Angela Merkel may lose support and Europe could see a rise in populism. 

How does this exercise help our clients?

This type of analysis teaches business leaders how to identify plausible high-level scenarios and adapt their strategies accordingly. It also teaches the importance of diversification, in that localized instability can have a disproportionate impact on specific regions and industries. As with all our Industry Leader Network events, it also helps clients meet each other and discuss broader issues of relevance to their business.

About the Industry Leader Network

The UBS Industry Leader Network is a hand-picked group of business leader clients who operate private companies around the world. Monthly dialogues and networking events provide members insight on the health of the economy as seen and experienced directly by other business owners.

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