Geopolitical storms signal new norm for risk managers

Risk managers waiting for geopolitical tensions to ease could be putting their firms at risk, PARIMA chairman Franck Baron has warned.

Speaking with StrategicRISK about current global political tensions following the release of the WEF report last month, Baron said: “This type of geopolitical instability is not going to be resolved anytime soon, so what we have in front of us is at least a five to ten years of geopolitical instability that we have to deal with.

“It will have an impact on people’s safety and on business stability or operational destruction. Even though it is related to political aspects, this will have an impact on the supply chain and the value chain of a lot of organisations”

Baron added a significant portion of the core of the risk map relates to geopolitical issues. “It’s something that should be very well understood by risk specialists and business leaders because it does mean that some of the political decisions made by some of the leading countries in the world do have now aftermath consequences for everyone.”

Baron also highlighted the importance of Asia Pacific risk managers having a full understanding of geopolitical risks in areas outside the region but whose ties to the region could be of significance.

”Most of them do have oversees businesses and investments and so they have to be better now at understanding what is happening in the Middle East, Africa, or in South America, for example. This can potentially have a large impact on their business.

”We are seeing a growing number of Asian cooperation’s being very active in terms of investment outside of the region. But I think something where a lot of companies in Asia are not yet fully equipped to manage the risk,” he added.