Geopolitical Risk Management: No Longer Just a “Nice to Have”, But a Corporate Imperative
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March 13, 2025
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Geopolitical disruptions, from trade wars to attacks on digital infrastructure, are impacting global business operations—the corporate geopolitical risk manager is critical to navigating this volatile landscape. Effective risk management requires a cyclical, data-driven approach encompassing identification, quantification and mitigation, helping equip businesses to build actionable strategies and resource prioritisation. Fundamentally, crisis preparedness—rooted in simulations and clear protocols—is the true cornerstone of resilience.
Geopolitics in the C-Suite
Geopolitical risk is no longer an abstract concern confined to government corridors. For businesses, it’s an operational reality. Recent years have brought an intensification of these risks:
- Geoeconomics, the weaponisation of trade, investment and interdependence is now a standard tool of modern governance.
- Technological rivalries between global powers are redefining innovation, regulation and competition.
- Conflict and political unrest, from Russia’s invasion of Ukraine to regional instability in key markets, are disrupting global commerce with unprecedented speed and intensity.
Companies need to approach the renaissance of geopolitics proactively, not reactively. This requires factoring geopolitical risk into corporate strategy and ensuring robust preparedness for a rapidly shifting landscape. This may entail changing organisational structures, exiting or entering certain markets, re-aligning supply chains or shifting to different product or customer groups entirely.
For corporate leaders, these dynamics raise a pressing question: Is your organisation equipped to navigate the next geopolitical crisis?
The Case for a Geopolitical Risk Manager
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At the heart of the effort to make organisations crisis-proof is the corporate geopolitical risk manager. Once a niche function, this role is now central to navigating the complexities of global business. The geopolitical risk manager need not be a single individual but rather refers to a function.
Depending on the size, the operations and existing structures of an organisation, creating a new position may not be the best solution. What matters is a clear understanding who is ultimately responsible for geopolitical risks and a shared appreciation of how the impacts of geopolitics on a company are translated and integrated into a company’s overall risk management approach. It’s likely for GC’s that this dimension of their role will take on increased importance.
From regulatory compliance to market access, geopolitical developments can cascade across the organisation, threatening multiple critical dimensions. Key impacts include:
- Digital Risks: Geopolitical tensions can increase the likelihood of state-sponsored attacks and espionage targeting corporate digital infrastructure.
- Compliance Challenges: Complex regulatory environments, sanctions and trade restrictions require vigilance to avoid legal and financial repercussions.
- Trade and Value Chain Disruption: Trade barriers and regional instability can upend supply chains, causing delays and increased costs. Creating supply chain visibility beyond tier-1 is key.
- Financial Risks: Currency volatility, shifting tax policies and cross-border capital controls can destabilise financial planning and operations.
- Corporate Security Threats: Geopolitical crises can jeopardise the safety of employees, facilities and physical assets in volatile regions.
- Reputation Damage: Missteps in navigating geopolitical issues can tarnish brand image, especially in regions with sensitive political or social climates.
The geopolitical risk manager serves as the organisation’s sentinel, monitoring the global landscape and translating risks into actionable insights for the C-suite.
The geopolitical risk management function bears four key responsibilities:
- Risk Identification: Assessing global and regional political dynamics to understand potential threats.
- Risk Quantification: Turning qualitative insights into measurable impacts on revenue, costs and operations.
- Risk Mitigation: Collaborating across functions to reduce exposure and build resilience.
- Crisis Preparation: Developing contingency plans and leading simulations to prepare for geopolitical crises.
Building a Geopolitical Risk Management Function
Effective geopolitical risk management is cyclical, with four key stages:
Risk Exposure Assessment: Understanding Your Geopolitical Fingerprint
Every company has a unique geopolitical risk profile based on its industry, geography and operations. A thorough geopolitical risk exposure assessment reveals where vulnerabilities lie—whether in supply chains, regulatory environments or critical markets. Assessing the geopolitical fingerprint should be performed according to a quantitative methodology, allowing the risk management unit to map the geopolitical risk exposure per business dimension from low to high. The assessment should distinguish between inherent and residual risk.
Identification: Recognise Geopolitical Risks
Relevant geopolitical developments must be observed and analysed. This involves monitoring political events, economic trends and social movements that could impact the company’s operations. Informed by the organisation’s geopolitical fingerprint, observation and analysis can be streamlined to focus on aspects that matter most.
Evaluation: Quantifying the Impact
Geopolitical risks often seem intangible, but they can and should be quantified. Applying a corporate-wide risk quantification methodology helps create meaningful insights across the risk management function. For example, assessing how a 10% increase in tariffs might impact production costs and modelling the revenue implications of losing access to a key market due to sanctions.
Quantification enables prioritisation, ensuring that resources are focused where they matter most. Establishing thresholds is a further vital component to identify risks which demand an active mitigation strategy. These thresholds depend on your specific risk environment and appetite. Once exceeded these thresholds should trigger active preparation for the respective risk ensuring a sound transition from risk management to crisis preparation.
Mitigation and Crisis Preparation
Once risks are identified and measured, the next step is to act:
- Mitigation Strategies: Implement measures to alter inherent or residual geopolitical risk, such as supply chain intelligence, business model alteration or policy advocacy.
- Crisis Simulations: Prepare for worst-case scenarios with regular drills involving geopolitical risk experts, senior leadership and independent advisors.
- Clear Protocols: Establish roles, responsibilities and communication plans to ensure swift and effective responses.
Crisis Preparedness: Bridging the Gap Between Risk and Resilience
In the current global environment, the possibility of geopolitical crisis has increased and is likely to remain high. It is not a question of if, but of when and where. In a geopolitical crisis affecting an organisation, the ability to transition seamlessly from risk management to crisis management will determine the organisation’s resilience. This requires:
- Integrated Expertise: Geopolitical risk managers must be embedded in crisis response teams, offering real-time insights to inform decision-making.
- Post-Crisis Reviews: Each crisis bears a learning opportunity. Organisations that rigorously analyse their responses will emerge stronger, more agile, and better prepared for future challenges.
From Insight to Action: Best Practices
To thrive in today’s volatile environment, businesses should adopt these best practices:
- Invest in Expertise: Equip your team with skilled geopolitical risk managers who combine analytical rigour with strategic insight.
- Leverage Data: Use technology and analytics to track geopolitical developments and quantify their business impacts.
- Embed Resilience: Make geopolitical risk a core element of strategic planning and risk management functions.
- Prepare for the Inevitable: Regularly update contingency plans and conduct cross-functional crisis simulations.
Embracing the Geopolitical Imperative
Geopolitics is not a passing storm but a defining feature of today’s business environment. Organisations that treat it as a strategic priority—embedding risk identification, quantification, and mitigation into their operations—will be best positioned to weather future crises.
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March 13, 2025
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