Roundtable event: Finding opportunity amidst the geopolitical risk landscape

The Corporate Risk Radar report found that geopolitical risk is the fastest-growing ‘high-impact risk’ in 2024, rising to priority number four from number eight two years ago, with top concerns including the threat of recession, raw material costs, and supply chain disruptions. 

Hosted by Chris Holme, Partner, and leading employment law specialist, the roundtable was attended by GCs and senior peers from diverse sectors. They were joined by a special guest, strategic risk and geopolitical expert Hagai M. Segal, who has worked with organisations at the forefront of risk management, including the FBI, the US Federal Reserve, the Metropolitan Police, and the British army. 

Throughout the roundtable, Segal provided fascinating insights and anecdotes on strategic risk, spanning the threat of cyber-attacks, demographic changes, global power shifts, and events that could spark World War Three. Most importantly he reassured the audience there is reason to be optimistic and that opportunities can be found amid the risk, with the right approach. 

We’re living through a polycrisis

Opening the discussion, Holme observed that there is more going on in the world now than at any time since the Cuban Missile Crisis, while “…the world is far smaller than it used to be… data instantaneously goes from one end of the world to the other.” 

Segal agreed that, on one level, we’re living in “pretty traumatic times,” and a “polycrisis world”. Yet, there is still reason for optimism. While events in Syria, Gaza, Ukraine, and elsewhere are devastating for local regions, they are not leading to global conflict. 

For this reason, Segal likened geopolitics to “…the background music we hear wherever we go.” The issue for business leaders is that too many are tuning out the hum, rather than using it to inform decision-making. So, if global events impact their operations, they find themselves on the back foot, focused on loss mitigation rather than strategic thinking, with significant reputational and financial repercussions. 

Adapting to a polycrisis world 

Addressing how organisations can manage geopolitical risk more effectively, Segal stressed that it doesn’t have to involve wholesale change but “adapting classical principles of good governance, good organisational structure and good risk management to a new, adaptive and changing world.” Key steps include integrating the risk function with the wider organisation and using simple tools to develop literacy around risk.  

“Organisations realise they're vulnerable because they thought they owned it,” he explained. “But they created a risk function to tick boxes and then blame when things went wrong. That risk function didn't talk to the rest of the enterprise.”

Experiences of risk 

Breaking out into small groups, Hagai asked delegates to discuss the geopolitical issues impacting their organisations. The discussion surfaced a wide range of experiences and perspectives:

• Conflict drives regulatory change: Often it isn’t global conflict itself that disrupts business but how these events impact the regulatory environment. Overlooking this possibility can derail business planning and opportunities. 
• Finding opportunity in volatility: Many delegates agreed it is vital to lean into volatility and spot opportunities within the chaos. Encouragingly, some feel more confident doing this following their experiences managing Covid and Brexit disruption. 
• Risk is subjective: Several delegates commented on the challenge of navigating diverse attitudes towards geopolitical risks across leaders and global cultures, and how this can impact an organisation’s ability to capitalise. 
• Balancing politics and ethics: Many were concerned about the recent political shift in the US and what this means for the rest of the world on issues such as DEI (diversity, equity, and inclusion) and ESG (environmental, social, governmental).

Starting a conversation about geopolitical risk

How can organisations respond more effectively and proactively to geopolitical risk? Segal stressed the role of simulation in testing organisational preparedness for different events. This approach starts a conversation about the nature of risk, and risk tolerances, and even helps surface new threats, by building a better understanding of processes, reporting channels, and employee experiences.

Organisations must also look beyond traditional risk models, which are failing to identify some of the biggest geopolitical concerns. Segal raised numerous trends and possible threats that should be on company agendas but often aren’t. For example, what happens if China invades Taiwan? Or the EU collapses? How would such events impact global supply chains, workforces, and beyond? Working through these eventualities brings the whole organisation along in exploring solutions and scenario planning, improving company agility and risk management as a whole. 

A new geopolitical corporation 

CEOs today are the face of geopolitical corporations, helping to shape the policy of public reality, societal, and geopolitical issues. Leaders must swerve negativity and position their organisations favourably alongside key geopolitical issues. For example, Segal advises leaders to identify ways to engage in corporate diplomacy, by offering aid or other support to affected governments, to help find solutions and build valuable relationships for the future.

But beyond that, Segal encourages business leaders and their wider organisations to become so comfortable with geopolitical risk that they can profit from it, having the confidence to go against conventional thinking to identify long-term revenue streams.

To do this, they must tune into the “background music” of geopolitics, look beyond the “old systems that haven't adapted to the polycrisis world,” and make geopolitics a part of everyday conversations. Geopolitical risk needs to come out of the boardroom and become part of the real world.