Suki Basi, managing director at Russell Group, sets the scene for why geopolitical instability is now the top concern for corporate risk managers – and what can be done to manage it.
AI (Artificial Intelligence) concept. Deep learning. IoT (Internet of Things). ICT (Information Communication Technology).
It was once said that there are decades where nothing happens, and there are weeks where decades happen. We are living in a turbulent era where geopolitical friends and foes alike are struggling to triangulate their economic needs, often in the face of conflicting value systems, where new and dissolving alliances are creating new supply chains.
In a world in which commodities flow across global shipping and aviation trade routes in greater volumes, it turns out that the biggest commodity of all is business intelligence.
What an astonishing year this has turned out to be! It has just been one thing after another. Five years ago, the global economy came out of the other side of a global pandemic in poor shape, though it could have been much worse, only to sleepwalk into the Russia/Ukraine crisis.
That was only a few short years ago andhere we are in 2025, watching events unfold around the world, with increasing incredulity. Conflicts are springing up across the globe from the Israel-Hamas war, to rising tensions between Israel, Iran and USA and a civil war in Sudan.
All of these are taking place against a backdrop of mounting political unrest in rich and poor nations, straddling class, education and culture.
Geopolitical instability is viewed as the number one major concern for corporate risk managers, highlighting the volatile nature of the last few months, according to a survey run earlier this summer by my company’s trade threat intelligence team.
The survey, titled “Quantifying the Need for Connected Risk Transfer”, surveyed 33 members of the Russell Working Group, which comprises risk managers representing FTSE 100 and 250 companies.
69% of respondents choose geopolitical risk as a major concern, out of a list that included cyber/digital, supply chain disruption, climate/weather, business interruption (non-damage) and business interruption (damage). Similarly, when asked to rank emerging risks, geopolitical instability and trade uncertainty dominated the list, being ranked one and two respectively.
Other findings in the report include the widespread use of scenario analysis requiring business intelligence in organisations and the increasing desire of corporates to have their risks transferred, with up to 50% of respondents wanting between 25% to 50% of their losses transferred. Geopolitical risk is officially the number one risk of concern for corporate risk managers.
A year ago, geopolitical risk would not have been considered a major risk of concern by many corporates. Yet, because of recent events, it has jumped up the list. The skyrocketing rise of geopolitical risk reflects the increasingly volatile nature of the geopolitical landscape, with events moving at a rapid pace forcing corporates to make decisions increasingly on the fly.
It is imperative in this new landscape that corporates start to deploy and use scenario analysis to try and get ahead of events, and stress test the impact of likely events on their portfolios. Without such an approach, then corporates will increasingly be at the mercy of these fast-moving events along with the unintended consequences.
I will conclude with lyrics from the song Land of Confusion by legendary 1980s pop star Phil Collins:
There’s too many men, too many people / Making too many problems / And not much love to go round / Can’t you see this is a land of confusion?
It’s hard to disagree with this sentiment! To be free from the land of confusion you need know-how combined with business intelligence.