Geopolitical risk management as a success factor in uncertain times
The Russian invasion of Ukraine has made it clear: the notion that “geopolitics” belonged to the past no longer applies. Geopolitics is high on the risk agenda of German businesses.
“Increased risk awareness, however, is not enough. Effective risk management requires a structured understanding and derivation of business-centred measures.”
Our integrated approach to geopolitical risk management
Geopolitical risks affect key management functions
To move from risk awareness to risk management, companies should focus on six impact dimensions. These help to identify geopolitical risks in a structured way and to derive measures. Geopolitics has an extensive impact on many business areas and should therefore be considered holistically in corporate management.
This also means that no new functions are required to be created in order to navigate successfully in an environment characterised by geopolitical uncertainty. It is rather a matter of integrating the six geopolitical impact dimensions into existing corporate management structures.
Sanctions & Regulation – CCO
- Expansion of sanctions, increase in trade barriers
- Growth in corruption as an instrument in geopolitical competition
- Increase in compliance requirements
Corporate Security – CSO
- Geopolitical conflicts extend to physical security of employees
- Expanding physical security provides opportunities to secure investments and tap into new markets
Reputation – CEO
- Business activities are increasingly watched by politics and the public
- Value-based management becomes increasingly important
- Damage to reputation means loss of turnover
Investments & Finances – CFO
- Geopolitical developments are becoming increasingly important for location decisions
- Foreign investment activities are increasingly politicised
- Governments change their investment guarantee schemes
- Banks and insurers might charge premiums for geopolitically risky investments
Value Chains – COO
- Economic interdependence no longer guarantees peace and stability, but is used as a weapon
- Supply chains – esp. for critical raw materials – are being politicised
- Geopolitical uncertainty adds to price volatility
Cybersecurity – CISO
- Geopolitical conflicts shift to cyberspace
- State-sponsored cyberattacks continue to increase
- Intellectual property at risk
- Strong cyber security builds trust
“The six impact dimensions of geopolitical risk show: Not everything is new, but much needs to be rethought.”
Our approach at a glance
- Risk exposure analysis
- Scenario development
- Stress test
- Risk and opportunity management
Risk exposure analysis
We assess your company’s geopolitical risk exposure to challenge your readiness to react. The result is your individual geopolitical risk profile (GPR).
Scenario development
Based on your risk exposure recorded in the geopolitical risk profile, we will develop customised scenarios. We take opportunities as well as risks into account.
Stress test
We assess the impact of predefined scenarios on your key value creation processes. You will learn what costs your organisation is facing should certain geopolitical scenarios materialise. This is based on a comprehensive analysis of your internal processes as well as external factors.
Risk and opportunity management
Development of structured approaches for the strategic management of geopolitical risks and for active opportunity management. This includes monitoring of geopolitical developments.
The geopolitical risk profile
The geopolitical risk profile is unique for each company
Which of the six dimensions are particularly relevant differs according to factors such as business model, degree of global integration or supplier bases.
An analysis of your geopolitical risk exposure can provide clarity:
Which dimensions are particularly affected in my company?
In which dimensions does the exposure exceed my risk appetite?
Is my risk exposure changing in view of foreseeable future developments?
Renaissance of geopolitics: how companies can integrate geopolitics in their risk management
Our latest thought leadership on geopolitical risk management. Geopolitical risk can be measured. Our approach focuses on company-specific risk exposure. This individual geopolitical risk profile forms the basis for strengthening control over geopolitical uncertainties, avoiding losses and seizing opportunities.
“Facing a fracturing world, business leaders should act according to the motto: Prepare for the worst – and hope for the best.”
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