No one can be complacent about geopolitical risks these days. The shocks and surprises of the past few years show how easily assumptions about liberal markets, international relations, conflict, and democracy can be shaken. Geopolitical volatility has become a key driver of uncertainty, and will remain one over the next few years.
This study looks at three risks with geopolitical consequences and interconnections: protectionism, energy crisis, and water and food scarcities. While the threat of growing protectionism is a daily feature in the news, an energy crisis resulting from the worsening Middle East situation or the spread of water scarcity could also disrupt the world. Should any of these situations become full blown, the impacts would be nothing less than earth shattering for how the world governs or does business.
The authors also sketched out possible risk management strategies that governments and businesses could use to mitigate the negative consequences of risks. This should help boards and risk managers better understand the potential impact of various geopolitical risks on their financial and physical assets, operations including supply chains, and people.