Geopolitical uncertainty is reshaping boardroom priorities and acquiring the right expertise is crucial for strategic resilience, writes Dan Byrne
Geopolitical risk: Is your board talking about it? If so, do they know how to handle it?
The harsh reality is that many companies can’t do so properly. However, stakeholders are rarely patient when it comes to geopolitics. When something happens, they want a response from your corporate leadership.
The last thing your board needs to be is unaware of how to handle a situation, what to say, and how to adapt your strategy to changing global events. The challenge is processing that it’s all happening at once.
The news cycle is now dominated by the Israel-Hamas war. Before this started, the spotlight was on the Russian invasion of Ukraine and, before that, the chaotic US withdrawal from Afghanistan.
Meanwhile, we’ve got tensions between the West and China, the right-wing backlash against Brazilian and US elections, and unresolved Brexit issues – not to mention the protracted conflicts that are now so ingrained in the fabric of modern geopolitics.
Every geopolitical crisis begins a new chapter of geopolitical pressure in corporate playbooks.
The importance of geopolitical risk
Assessing geopolitical risk is essential. It’s not going away and, depending on your company, it could be crucial to your strategy.
This doesn’t have to be direct – your company’s stance on a particular issue, for example. It can also be indirect – such as the businesses you work with within your supply chain.
Many American companies have been shifting their manufacturing from China to other locations, such as Vietnam, out of fear that Chinese authorities could disrupt their business at the drop of a hat.
Corporate leaders will be prodded by investors wanting to know if their company can survive through sanctions or consumers wanting to see their response to escalating conflict. The storm of questions will come; the challenge is how best to weather it.
Expertise needed
Experts in geopolitical risk will have the following skills:
- A deep understanding of corporate strategy and risk;
- Knowledge of global affairs, new or potential conflicts with global impacts, the intricacies of trade sanctions and the knock-on effects of government changes on international relations; and
- The ability to navigate through substantial geopolitical fallouts.
The hard part is finding this expertise. Finding the right candidate to fill a board seat depends on multiple factors, like the availability of talent, training, networks, and an alignment of values. In some situations, this is a heavy ask.
It’s also worth noting that the market for geopolitical expertise is highly active right now as companies realise that they need to be prepared.
Playing the long game
Organisations should realise that the quest for geopolitical experience for your board may be a long game.
It can take time to find the talent that works well for your business – and it’s time that stakeholders may not always give you, pushing you for an answer and refusing to accept that you might need more time.
That’s why it is essential to start now on geopolitical expertise if you haven’t already. If it feels like you’re playing catch-up, bear in mind that this won’t always be the case.
Eventually, you will have the solid knowledge you need on your board to help you develop thorough answers to complex questions.
In reality, the world always moves faster than corporate governance is comfortable with, so it’s better to get ahead.
Dan Byrne is a content writer at The Corporate Governance Institute
LOADING...