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Navigating the Unknown: Manage Geopolitical Risk Proactively

Acknowledge complexity and uncertainty and prepare for various disruptive scenarios, a leading risk analysis and intelligence executive advises.

Friday, April 26, 2024

By Tom Thimot

The world is a complex and unpredictable place, and for businesses operating in an increasingly interconnected global landscape, geopolitical risk is no longer a distant rumble, but a constant storm brewing on the horizon. From trade wars and cyberattacks to pandemics and regional conflicts, the potential for disruption is ever-present.

Yet, amidst the uncertainty, there is an opportunity to seize control. By embracing a forward-looking, proactive approach to geopolitical risk management, businesses can not only weather the storms, but emerge stronger and more resilient.

“Flyover State” Myopia

The analogy of geopolitical risk as a “flyover state” – acknowledged but deemed irrelevant – is a dangerous fallacy. As the Manila and Taiwan earthquakes starkly illustrate, seemingly distant events can have devastating consequences, disrupting supply chains, severing communication, and revealing vulnerabilities. The COVID-19 pandemic also underscored this interconnectedness, exposing businesses that had failed to consider or prepare for such a global crisis.

tom-thimotSupply Wisdom CEO Tom Thimot

This isn’t about predicting the future; it’s about acknowledging the inherent uncertainty and taking action to mitigate its impact. Just like Reginald Victor Jones, the pioneer of scientific intelligence, didn’t predict the Battle of Britain. He prepared for it by meticulously gathering and analyzing information.

In the same vein, businesses must move beyond reactive, crisis-driven responses and adopt a proactive, “see what happens, show up” approach.

A Culture of Proactive Risk Management

Building a robust risk management framework involves several key steps:

  1. Embrace a holistic view. Geopolitical risk isn’t isolated; it’s intertwined with economic, social, and environmental factors. Develop a comprehensive understanding of the global landscape, identifying potential hotspots and emerging trends.
  2. Quantify the risk, don’t dismiss it. Ignoring risk doesn’t make it disappear. Utilize scenario planning, war-gaming, and stress testing to assess the potential impact of various geopolitical events on your operations, finances, and reputation.
  3. Build resilience, not just awareness. Knowledge without action is futile. Translate risk assessments into concrete mitigation strategies. Diversify your supply chain, invest in cyber defenses, and establish contingency plans for various disruptive scenarios.
  4. Communicate and collaborate. Foster a culture of open communication, where risk is acknowledged and discussed openly. Collaborate with internal and external stakeholders including government agencies, industry associations, and risk management experts.
  5. Embrace technology. Leverage the power of technology to gather real-time intelligence, analyze vast datasets, and predict potential disruptions. Invest in advanced analytics platforms, AI-powered risk assessment tools, and communication technologies for crisis response.

From Competitive Advantage to Stakeholder Trust

The benefits of proactive risk management extend far beyond mere crisis preparedness. It can:

  • Enhance competitiveness. By demonstrating foresight and resilience, you attract investors, partners, and talent who value stability and preparedness.
  • Boost shareholder confidence. Proactive risk management fosters trust and transparency, reassuring shareholders that their investments are protected.
  • Unlock new opportunities. By understanding and mitigating geopolitical risks, you can identify and capitalize on emerging markets and opportunities that others might deem too volatile.

Knowing What’s Knowable

In an ever-changing world, certainty is a luxury we can no longer afford. But by embracing the power of “knowing what’s knowable” – gathering intelligence, assessing risks, and taking proactive steps – businesses can navigate the unknown with confidence.

It’s not about predicting the future, but about being prepared for whatever it may hold. So ditch the “flyover state” mentality, roll up your sleeves, and start building a resilient future for your business. Remember: The storms may be inevitable, but you don’t have to be caught in the rain.

 

Tom Thimot is chief executive officer of Supply Wisdom. Its platform provides continuous monitoring, intelligence reports and real-time alerts across the financial, cyber, operational, ESG, compliance, Nth party, and location-based risk domains.




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