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1.

Navigating the New Normal -

Strategic Analysis and
Management of Geopolitical
Risks in Business

Drafted by
December 2023 Intueri Consulting LLP
Navigating the New Normal - Strategic Analysis and Management of Intueri Consulting LLP
Geopolitical Risks in Business

Content

Introduction 2
Business and Geopolitical Risks 4
Geopolitical Risks in Global Trade and Investment 6
Better Assessment of Geopolitical Risks 11
Conclusion 13

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Navigating the New Normal - Strategic Analysis and Management of Intueri Consulting LLP
Geopolitical Risks in Business

Introduction
The world around us as we see it has become far more
interconnected, interrelated, and interdependent than
anyone could have ever predicted. A certain level of co-
dependency is seen not only between governments but
also at the civic society and population level. This has
resulted in creating an impact on the business world as
well. With business and economies so closely interrelated
with any country’s socio-political structure, the decisions
of the latter significantly affect the former in every aspect.
Therefore, it is vital for businesses to view their overall functioning from a more
holistic point of view. This would include considering domestic politics,
international relations, the global economy, and the ever-changing geopolitical In an era characterized by
risk analysis. Today, businesses face the combined impact of geopolitical risks
on the global scale and domestic politics and legislative procedures, each trade wars, economic
playing a significant role in shaping how businesses operate. These policies and sanctions, and climate-
decisions are not restricted to a single nation but transgress beyond borders
and administrations. related disasters,
businesses must closely
In the 21st century, geopolitical risks have transitioned from background
concerns to influential forces that shape global affairs. These multifaceted risks analyze these risks to
encompass conflicts, cyberattacks, climate-related events, and territorial achieve sustainable
disputes, impacting politics, economics, society, culture, and more. They disrupt
economies by increasing business costs, affecting supply chains, and curtailing growth and expansion
international trade, while also fostering social and cultural changes, including across borders.
forced migration and transformations in cultural heritage. On the political front,
these risks can lead to the realignment of nations and shifts in power balances.
Recognizing the profound implications of geopolitical risks is essential for
governments, businesses, and individuals to make informed decisions in a world
marked by the ever-present challenges posed by policy changes, natural
disasters, terrorist acts, theft, or war. In an era characterized by trade wars,
economic sanctions, and climate-related disasters, businesses must closely
analyze these risks to achieve sustainable growth and expansion across borders.
Geo-political risks, therefore, need to be closely analyzed to bring about any
form of business growth, development and expansion that goes beyond a
specific territory or country.

The most recent Israel-Palestine conflict, with its deep-rooted historical and
geopolitical complexities, has far-reaching consequences on a global scale.
Involvement from nations like Iran adds another layer of complexity to an
already fragile situation. This conflict's potential to disrupt oil markets raises
concerns about global energy supplies, particularly through the strategically

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Geopolitical Risks in Business

vital Strait of Hormuz. Furthermore, the escalating humanitarian crisis in the

region introduces the risk of fragmenting the Western alliance and straining
relationships between the United States and its allies. Additionally, this conflict
holds the potential to reshape the power dynamics in the Middle East,
especially concerning the balance between Iran and Saudi Arabia, with
implications stretching across the entire region.

The global crisis between Russia and Ukraine has led to a severe energy crisis in
the Eurozone with the European countries somehow trying to manage with the
limited supply of gas. This crisis had a detrimental impact on business
operations as well. For example, the famous German conglomerate Siemens,
which was significantly dependent on the Russian market for conducting its
business, had to scale down operations due to the sanctions imposed by the
West. Most of these multinational corporations and even smaller enterprises
have a widespread international presence, either by means of foreign direct
investments, or even being closely integrated into multiple global supply chains.
Therefore, it is imperative to take these factors into consideration while
conducting business operations.

Amidst the global challenges of the enduring COVID-19 pandemic, the debate
over globalization's merits and drawbacks intensifies as nations seek to manage
risks. Concurrently, the proliferation of cyberattacks, now used as tools of
statecraft, poses increasing human and financial costs, exacerbated by the
expanding digitization of critical infrastructure. Meanwhile, soaring sovereign
debt levels and diminishing creditworthiness of nations have led to a surge in
sovereign defaults, heightening concerns about an impending sovereign debt
crisis. Simultaneously, dwindling exports in major economies amplify fears of
global fragmentation. These multifaceted issues demand nuanced solutions to
safeguard economic stability and security on a global scale. 1

While these issues might seem distant and not impacting specific business
interests, a closer look at them highlights how they have affected hundreds of
businesses, firms, and companies worldwide. This as a result, encouraged
management and business leaders to prioritize GPR while considering
operational expansion. The two main areas where businesses have started the
policy of strategy development include the Global Value Chain (GVC) and the
International Expansion of a Firm. For both these aspects, GPR needs to be
closely considered in order to develop a better understanding of the
environment in which business is being or is going to be conducted. This paper
aims to provide a strategic analysis of how companies can evaluate and analyze
GPR and, hence, provide better support to its operations and management.

1
https://www.spglobal.com/en/enterprise/geopolitical-
risk/#:~:text=Geopolitical%20risk%20FAQs&text=Geopolitical%20risk%20can%20be%20understoo
d,supply%20chains%20and%20territorial%20disputes.

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Navigating the New Normal - Strategic Analysis and Management of Intueri Consulting LLP
Geopolitical Risks in Business

Business and
Geopolitical Risks
Geopolitical risks have rapidly ascended the priority ladder for businesses, with
over 60% of respondents now recognizing their "very significant risk" to the
global economy. This shifting perspective indicates the heightened significance
assigned to geopolitical risks by businesses, signifying a noteworthy
transformation. Notably, tensions related to regions like Taiwan, South Korea,
and Russia - NATO has played a pivotal role in elevating these concerns. 2

In today's interconnected world, the ripples of geopolitical events extend well

beyond the realms of governments and international relations, reaching deep
into the corporate world. This influence touches supply chains, trade relations,
and global markets, compelling businesses to navigate intricate complexities.
The potential repercussions are substantial, translating into increased costs,
supply chain disruptions, and heightened stakeholder anxiety, all of which can
have profound implications for a company's operations and bottom line. In tensions related to
The changing corporate outlook toward geopolitical risks has emerged against regions like Taiwan, South
the backdrop of the war in Ukraine and the extensive impact of the COVID-19 Korea, and Russia –
pandemic. These two events, with their intricate second-and third-order effects,
have shifted geopolitical risks to the forefront of many companies' risk agendas. NATO has played a
This transformation is particularly pronounced among businesses operating in pivotal role in elevating
sectors or regions that historically bore lower exposure to political risks,
prompting them to adapt rapidly. these concerns.

In addition to these developments, a new dimension of political risk is

emerging, introducing fresh challenges to businesses. It extends beyond
geopolitical tensions such as the US-China trade war and European-Russian
conflicts, encompassing political forces influenced by burgeoning ideologies
and populism. These forces traverse a broad spectrum of contentious issues,
including climate change, human rights, discrimination, religious freedoms, and
more, transcending the confines of international markets and supply chains.

These issues culminate in what can be aptly termed "culture wars" – a

manifestation of political polarization and a degradation in public discourse that
transcends national boundaries. Their influence permeates workforces and
markets, ushering in novel forms of political risk that compel businesses to
confront issues beyond conventional geopolitical considerations. The challenge
lies in the endeavor to preserve neutrality while grappling with activism, cyber
threats, and even personal security risks concerning business leaders.

Moreover, businesses face a delicate balancing act as they seek to maintain

relations with governments while addressing concerns related to data security,

2
https://www.cnbc.com/2023/08/03/geopolitical-risks-are-a-top-global-threat-to-businesses-survey-
finds-.html

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reputational integrity, environmental, social, and governance (ESG) standards,

and security risks emanating from those governments. This complexity
intensifies as some governments veer away from democratic governance,
obliging businesses to reconcile their core values and brand identity with the
necessity of conducting business in markets where those values may face
compromise.

The recent crackdown on the pro-democracy movement in Hong Kong is a stark

reminder of the multifaceted risks confronting businesses. Global corporations
found themselves navigating the complex terrain that arises when employees
engage in civic activism while authorities exert pressure to curtail such
engagement. It underscores the intricate challenges companies confront in an
ever-evolving geopolitical landscape.

In response to these multifaceted challenges, businesses increasingly

acknowledge the imperative of incorporating geopolitical risks into their
strategic planning and risk management practices. This departure from prior
indifference underscores the pivotal role of geopolitical risks in the modern
business environment.

Sectors Vulnerable to Geopolitical Risks

Certain sectors face varying degrees of vulnerability to the impact of
geopolitical risks. The energy industry, for instance, is increasingly at risk due
to the growing digitization of its infrastructure, making it a prime target for
potential cyberattacks that could disrupt critical energy supply chains and
infrastructure. The tourism sector is not immune to geopolitical risks, as
political shocks can lead to an abrupt loss of investment, directly affecting
profitability and day-to-day operations.

Banks also find themselves susceptible to geopolitical tensions, which can

exacerbate market and credit losses, ultimately impacting profitability,
capitalization, and raising the cost of loans. 3 While some industries may seem
impervious to geopolitical risks at first glance, the retail sector is significantly
impacted. Retailers today face a multitude of challenges stemming from trade
barriers, currency fluctuations, supply chain disruptions, and shifting consumer
preferences, all of which can disrupt operations, increase costs, and affect
customer satisfaction. 4

Moreover, the manufacturing and automotive sectors heavily depend on

global supply chains, making them vulnerable to geopolitical risks. Trade
disputes and tariffs can drive up the costs of imported materials and
components, impacting production expenses. Supply chain disruptions, whether
due to political instability or natural disasters, can result in delays, reduced
efficiency, and affect the availability of essential parts, all of which can hinder
manufacturing processes and operational efficiency.

3
https://www.strategy-
business.com/article/03308#:~:text=Market%20Volatility.,investment%20flow%20into%20an%20ind
ustry.
4
https://losspreventionmedia.com/geopolitical-risks-in-retail/

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Geopolitical Risks in Business

These sectors, each characterized by unique vulnerabilities, demand a proactive

and astute approach to risk management to effectively navigate the intricate
complexities of geopolitical uncertainties on the global stage.

Geopolitical Risks in
Businesses must take into
consideration the various
socio-politico-legal
Global Trade and complications which are
prevalent not in the

Investment countries from where they

are receiving their raw
materials but also the
ones where the finished
In the realm of global trade and investment, geopolitical
products are ultimately
risks have evolved into a paramount consideration for
exported.
businesses. These risks, once viewed as distant concerns,
have proven to have tangible impacts on hundreds of
businesses, urging management and business leaders to
accord them a higher priority, especially in the context of
operational expansion.
Of particular significance are two pivotal areas where businesses increasingly
integrate geopolitical risk analysis: the Global Value Chain (GVC) and the
International Expansion of a Firm. In both these domains, GPR plays a central
role in enabling companies to develop a more comprehensive understanding of
the multifaceted environment in which they conduct their operations.

Global Value Chain (GVC)

Global Value Chains, in simple terms, refers to the fragmented production and
delivery process that many companies resort to, to ensure a more cost-effective
and time-efficient business mechanism. “International production, trade and
investments are increasingly organized within global value chains (GVCs) where
the different stages of the production process are located across different
countries.” 5 Businesses must take into consideration the various socio-politico-
legal complications which are prevalent not in the countries from where they are
receiving their raw materials but also the ones where the finished products are
ultimately exported. This is because even a slight disruption in any one segment
of the population can lead to untimely delays, halting of important services and
massive loss in terms of profit and investment. How different countries engage
with the Global Supply Chain reflects how successful they will be in promoting
their business.

5
https://www.oecd.org/industry/global-value-chains/

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Navigating the New Normal - Strategic Analysis and Management of Intueri Consulting LLP
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There are different sections in a global supply chain which face different kinds
of challenges in operating amidst the various geopolitical concerns. The
demand side consists of order placement and order allocation between
suppliers, procurement of raw materials required in the building of the product,
assembling of intermediate products before they are converted into finished
goods. If we only take these into consideration, there can be several
geopolitical scenarios that will pose a risk to the successful completion of these
processes. This will ultimately cause a delay in the overall business production
and operation.

Delivery companies like FedEx play an important role in the procurement and
delivery of raw materials which companies in the production process use. These
materials are secured from different parts of the world, which makes FedEx
vulnerable to economic and political conditions unfolding in different parts.
Therefore, they have to prepare a contingency plan in case their European truck
drivers go on a strike or there is an earthquake in Turkey blocking roadways and
other means of communication. Therefore, the Chief Procurement Officer of any
firm must inevitably prepare for any disruptions to its supply chain because of
geopolitical issues.

Indian companies who are dependent on Ukraine for the supply of “sunflower
oil” faced a major disruption in order allocation and procurement due to the
ongoing crisis in Ukraine. 6 Companies such as Gemini Edibles and Fats India Pvt
Ltd were unable to secure the required quantity from Ukraine which ultimately
led to shortage of vegetable oil in India. Ultimately, most companies have had
to shift their trade to Russia, buying oil at a much more expensive rate. The US-
China economic conflict has also caused major disruptions in Apple’s supply
chains because it significantly depends on China for the manufacturing of iPads
and iPhones. The trade sanctions and barriers have also reduced Apple’s market
access in this region.

The supply side in a global chain of goods and services also faces a challenge as
the world becomes witness to more complex geopolitical risks and
advancements. This includes warehousing, managing inventories, distribution of
products and commodities, marketing strategies that are followed and post-sale
customer specific services. Some of the common aspects that are affected by
geopolitical risks include disruption of production, trade barriers and sanctions,
transportation disruptions and post-sale complications.

For instance, the recent Turkey earthquake disrupted the movement of finished
products such as vehicles, machinery, and electronics outside the area, affecting
exports. The United States, which is a major importer of these items and
dependent on Turkey for their regular supply, had to face shortages and price
rise of these items. These postproduction complications and transportation
disruptions arising from geopolitical risks highlight that companies need to have
contingency plans ready to be implemented. The 2015 Nepal earthquake also
demonstrates how natural calamities disrupt supply chains. The widespread
destruction made it difficult for companies to transport raw materials and other
essential commodities successfully. Coca Cola which operates in Nepal through

6
https://www.oecd.org/ukraine-hub/policy-responses/the-impacts-and-policy-implications-of-russia-
s-aggression-against-ukraine-on-agricultural-markets-0030a4cd/

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its subsidiary Bottlers Nepal faced damage to their manufacturing centers and
distribution routes, disrupting supply. 7

The increased use of economic sanctions as an instrument of foreign policy

needs to be taken into consideration by businesses to be more effective. To
trade with one country, companies need to analyze their parent country’s
approach to this country and the host country’s internal and international
relations dynamics. In this scenario, we can take the example of Iran to
understand how sanctions impact business. The sanctions against Iran may be
uplifted but that will not guarantee companies that the situation is stable
enough to establish business and physical assets.

Geopolitical tensions have caused disruption in trade for many companies. For
instance, during the Arab boycotts of the 1970s and 1980s, many Arab
countries called for the boycott of American products including Coca-Cola. This
trend is now visible amidst US-China tensions, which has led to losses being
faced by both economies. In 2018, a strike by German metal workers affected
the automobile industry which affected companies like Volkswagen and
Daimler. Volkswagen in turn had to agree to an 8.5% pay hike, which burdened
their estimated costs. 8

In the post-Covid recovery phase, India has suffered significant blows to its
global supply chains in terms of falling exports. For instance, Hong Kong
emerged as one of India’s major trade partners, with India importing a wide
variety of materials ranging from electronic equipment, machinery, iron and
steel, medical equipment, and clothing. India also is a major exporter of
precious metals with Hong Kong being an important receiver. However, the
continued anti-China protest and government crackdown impacted imports in
Hong Kong, especially in the diamond import. Diamond traders in India faced a
fall in exports by almost 18%. Indian diamond companies such as Asian Star
Company were concerned that these protests would continue being a dent in
India’s diamond exports.

The overall relevance of global supply chains has also changed with the
changing nature of globalization. There has been an overall increase in the
global supply of services as well, even though existing policies mainly focus on
the supply of goods. For instance, the United Kingdom recently announced the
High Potential Individual (HPI) Visa, which seeks to attract more young talent
into the country from across the globe, whose ultimate net value would be an
addition to the UK economy. 9 This change in socio-political policy reflects an
attempt to attract more service-oriented business to the United Kingdom.
Therefore, we can see how the second chain of globalization is bringing forth
newer aspects to the GVCs. Therefore, when we talk about Global Supply
Chains, we must give equal focus to goods and services to get a better picture.

Today, GVCs are an integral part of every small or big business operations and
therefore, businesses tend to keep a close watch on their continuity. Strong and

7
https://www.business-standard.com/article/companies/coke-shuts-nepal-operations-
104081901027_1.html
8
https://europe.autonews.com/automakers/vw-agrees-85-pay-hike-less-inflation
9
https://economictimes.indiatimes.com/nri/work/uk-launches-new-visa-for-worlds-top-graduates-
and-you-wont-need-a-job-offer-to-apply/articleshow/91891862.cms

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reliable GVCs also act as an important guarantee in case businesses are hoping
to widen their operation base, by expanding nationally or internationally. By
building a reliable network of global supply chains, companies can ensure a
smooth transition into the international market.

International Expansion of a Firm

The widely interconnected and co-dependent global value chains have resulted
in business interests not being restricted to a particular country, region or
community. The nature of business has become more transnational and
multilateral in its structure, thereby involving more than one country or
government authority. Firms, businesses, companies are either inherently built
in that manner or have the objective to transgress national borders in the longer
run. However, when it comes to the international expansion of a business, it is
not just the will or the focus of the company in concern that matters. The
nature, extent and plausibility also significantly depend on the geopolitical
conditions prevalent in the area, region, or country that they are expanding
into.

Some mechanisms that are followed by different countries to facilitate the

overall trade process include Free Trade Agreements (FTAs) and Preferred
Trade Agreements (PTAs). India has over 10 such regional and international
trade agreements, all of which are designed to attract more investment and
business into the economy. These agreements have significant regional and
global implications because some of these agreements also reflect collaboration
with regional economic and political bodies. Sri Lanka and Thailand are such
countries with whom India has FTAs while it has multiple Comprehensive
Economic Cooperation Agreements with South Korea, Japan, Malaysia and
Singapore. These trade agreements significantly determine the ease of doing
business for both Indian companies abroad as well as for international
companies looking to invest in India. The India South Korea CEPA has provided
increased market access to Indian companies especially in the field of
pharmaceuticals, information technology and textiles. With access to a wider
market, more Indian companies such as TATA Motors, Mahindra and Mahindra,
Reliance are likely to expand their companies in this region. However, there are
disadvantages also that arise as a result of these agreements. Due to the Indo-
Japanese CEPA, Indian agricultural products such as tea, rice can face stiff
competition from Japanese exports, making the market situation more difficult
for Indian companies.

Companies looking to expand their businesses need to first analyze whether

their products suit the regions or countries they want to expand into. This
makes the concept of market research into brand strategy and product launch
extremely important. It has to be a profit generating venture, otherwise the
companies could be looking at serious losses. It is at this juncture that market
research becomes very important where experts can help companies
understand the kind of risks or challenges, they would face when they expand
internationally. When Starbucks expanded into Japan, they had to remodel
themselves to satisfy local demands as the business operations followed in the
USA did not work in Japan.

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In today’s world of rising economic and political tensions, business policies are
almost regularly changed to promote the “national interest” agenda. They
usually try to accomplish this by using a range of non-tariff measures which
becomes an instrument of promoting certain agendas. As mentioned in the
previous section, economic sanctions among other such regulations have
become a common challenge that companies face while expanding
internationally. The ongoing US-China conflict has made it very difficult for
several companies to conduct their business. For example, the Chinese
technology giant Huawei faced challenges in its international expansion due to
concerns raised by several governments, particularly the United States. The
company encountered restrictions and bans on its products over security
concerns.

Intellectual Property Theft has become a major concern for companies across
the global spectrum. Any company’s patent rights and property rights are
immensely valuable. 10 Therefore, most companies nowadays closely watch the
legal protection that other countries are offering when it comes to intellectual
property. Countries like India, Pakistan, Venezuela continue to appear at the
bottom of the list when it comes to legally strong IP laws. For these countries to
attract more international business, they have to provide better legal protection
for the same.

Companies of the 21st century are giving increased importance to compliance

protocols such as labor laws and protection as well. Countries with poor labor
laws are facing the challenge of attracting international business because of
poor working conditions, low health and economic standards. For instance, the
Uighur Forced Labor Protection Act (UFLPA) legislated by the United States
government, has put severe restrictions on American companies thereby
encouraging them to look into alternative means of procuring intermediate or
finished goods that they were earlier getting from the aforementioned
province.

The top management of many companies across the globe are now directing
resources to measure the value and suitability of such a business expansion.
This primarily helps them assess and in certain situations even predict the
nature of the threat that their business operations will face from the geopolitical
dynamics of that particular region. As per the Global Business Risk Report of
Dun and Bradstreet the Global Business Index or the GBI score has risen to 288
in the last quarter of 2021. This has been a result of various socio-political
developments across the world. 11

10
https://www.proofpoint.com/us/threat-reference/intellectual-property-theft
11
https://www.dnb.com/perspectives/finance-credit-risk/quarterly-global-business-risk-report.html

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Better Assessment of
Geopolitical Risks
The above analysis emphasizes the increasing importance of developing an
effective model for geopolitical risk management. Thus, companies, to ensure
continuity of business operations irrespective of these risks, need to allocate
resources and time to develop certain models to help them navigate these
issues. Given the current geopolitical scenario that the world is witnessing,
combined with the increasing interconnectivity between business and politics, it
is inevitable for companies to prioritize assessing these risks as a part of their
overall business plans. It is only by means of development of these plans and
strategies that companies can be a step ahead in handling these crises as they
arise and pose a threat.

However, it is neither feasible nor desirable to develop a single strategy that

can be globally used or applied for different company scenarios. A single
approach will not be comprehensive enough to be universally applied. This is
mainly because most companies have extremely varied interests and priorities
that demand very specific attention. The world is currently facing many different
crises which are not only impacting physical assets and establishments but also
the different interconnected global supply chains and overall business decisions.
Therefore, companies have to take into consideration their specific areas of
interest and concern in order to develop a more effective and efficient policy of
assessing and managing geopolitical risks. This is essentially the main reason
why this has to be an internalized process where the management and
executive need to be closely working with risk specialists to develop a policy
that is specific to the needs of the company. The different strategies that can be
followed to assess geopolitical risks have been discussed herein to develop a
clearer understanding.

1. Consultation with Experts

An important step in starting the process of assessing geopolitical risks includes
bringing in expert opinion which can analyze and understand the specific needs
of the company in question and provide the necessary advice. Experts bring
with them experience and outlook which can prove to be extremely beneficial
to the company’s requirements. They can not only devise the policy themselves
but also provide training to the executive, management and staff which will in
turn make them able actors in solving crises as they arise. All the key
stakeholders in the company who will be affected in case of any crisis should be
under expert guidance. These experts will help companies identify specific
areas of concerns that the companies might face due to the evolving
geopolitical scenario. They can provide important advice as to how a particular
geopolitical event might cause a disruption in the supply chain and how the
company can deal with the fallout. This can include policy experts, former
government officers, industry leaders, scientists, who can contribute to specific

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areas of the company’s business prospects. The appointment can be both for a
longer run or on a more temporary basis depending on the company’s specific
requirements and resources. For instance, a company seeking to expand its
business in a supposedly unstable geographic area can hire climate specialists
and related specialists on a short-term basis. They would play a crucial role in
advising the possible risk factors and discussing solutions for the same.
Similarly, if a company is launching a new product, they can consult local
entrepreneurs, business experts, behavioral strategists to create their branding
and marketing strategy. However, companies should also ensure that business
decisions are taken on the basis of advice received from an unbiased and
accurate source. They should always depend on “independent, third-party”
references for the same.

2. Identifying high impact areas and level of impact

A business is widely connected with different operations that work at different
levels of the organization. To enable the development of efficient risk
management models, companies will have to identify specific areas where they
will face maximum risks when it comes to geopolitical issues. This can be related
to either their supply chains, disrupting delivery or even their plans for
international expansion. A single business can be exposed to a variety of risks.
The kind of risk that the Chief Procurement Officer of a company will face will
be different from that faced by the Regional Marketing Head of the same firm.
Therefore, a company needs specific teams which will be working closely with
different departments to assess and manage risks. Multiple steps go before
identifying such high-risk areas and assessing the level of impact. Important
information regarding market and customer base, investment and assets, supply
chains and operations must be collected. The risk assessment model will also
include a form of comparative analysis to explain which factor will be affected
the most by a particular geopolitical event and how that will impact the overall
business operations. Depending on the nature and level of risk, companies have
the opportunity to handle them on a priority basis, thereby preventing any
losses.

3. Corporate International Plan

Geopolitical risks have significantly evolved in the last few decades and
emerged as one of the greatest risks to business operations. These risks include
not just economic fluctuations and financial changes but also domestic politics
and international dynamics. A company-specific policy within the institutional
framework makes the company better positioned to deal with ever-changing
geopolitical dynamics. John Chipman, a renowned international advisor, has
mentioned two distinct factors that constitute corporate international plans.
This essentially includes geopolitical due diligence and corporate diplomacy.
Therefore, companies, while creating their foreign policy, will have to keep
these factors in mind.

A company’s “corporate international plan” will also consider important factors

such as the company’s long-term goals in terms of international expansion and
recruitment. The policy will assess potential risks arising from operating in
different countries and regions. These can be political, legal, economic,
humanitarian and even geological risks. The policy will help companies navigate
complicated foreign legal structures and build a presence in the area where

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they hope to expand. These policies are specifically built to protect the
company’s interests in correspondence with the changing world outside.
Companies like Google have policies based on free expression, human rights,
and open access to information. However, it has faced difficulty in navigating
censorship laws in countries like China and thus has had to rethink and
sometimes even withdraw operations.

4. Modifying Existing Business Models

Many companies around the globe have also resorted to modifying their
existing business models to enable them to deal with the immediate challenges
they face due to geopolitical risks. In the face of unexpected risks, companies
must align their practices accordingly to ensure that supply chains are not
disrupted. This can be done by allocating more resources to collect relevant
information and employing more efficient risk management techniques to
analyze the information and understand its implications for business. Specific
teams within the organization can be assigned the work of analyzing global
trends, political developments, regulatory changes, and conflicts that can
impact overall business operations. This method is more of a damage control
mechanism that companies can adopt if they suddenly face risks and challenges
and need a faster-paced solution. This again highlights the importance of having
a corporate foreign policy in place that can assess potential risks and give the
business a better position to tackle them. Several studies have also provided
managers with a proper framework they can utilize while modifying business
models. The 2018 article “Managing Geopolitical Risks: The Role of Corporate
Diplomacy” by Ghemawat and Reiche highlights the benefit of involving
government, NGOs and other stakeholders who might help mitigate risks.

5. Local Partnerships and Government Networks

Companies should give importance to the countries where they already have
business operations and those they plan to expand into. One of the most
accurate ways of assessing risks and understanding market conditions is
increasing local presence in the areas concerned. This will give companies a
better understanding of the prevalent conditions, thereby helping them create
a better policy. This policy, in turn, will be better suited for the company and
give them an edge over the possible geopolitical risks they might face.

Conclusion
As we stand at the crossroads of this ever-evolving global
landscape fraught with geopolitical risks, one can't help
but wonder: What are businesses doing about it? The
complexity and interconnectivity of these challenges have
pushed businesses to develop specialized geopolitical risk
mitigation strategies. Yet, the true imperative lies in the

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Geopolitical Risks in Business

creation of a formal framework that transcends borders

and sectors involving governments, financial institutions,
and entities across the globe.
This framework will be pivotal in guiding the decisions and strategies of
businesses as they adapt and thrive in a world defined by geopolitical
uncertainty. In today's constantly changing and dynamic global business
environment, the convergence of geopolitical risks upon businesses has reached
unprecedented complexity and interconnectedness. The days of isolated
business ventures are no longer viable, as decisions in one corner of the world
can have far-reaching implications across the global economy. The pressing
reality is that a one-size-fits-all framework for managing these intricate
geopolitical risks simply does not exist. We find ourselves at a critical juncture
where businesses, governments, financial institutions, and industries worldwide
must collaborate to forge a comprehensive and adaptable framework for
geopolitical risk mitigation. The absence of such a framework exposes us to
uncertainties and challenges that can disrupt the very foundations of
global operations.

Therefore, it is imperative that businesses take proactive steps to identify,

assess, and monitor geopolitical risks, both independently and in collaboration
with external experts. Effective partnerships between governments and
industries are essential for addressing geopolitical tensions and maintaining
stability in our interconnected world. Industries must also remain vigilant,
employing multifaceted strategies, such as diversifying supply chains and
establishing robust contingency plans, to withstand the impacts of geopolitical
events. The influence of global regulation and the internet on geopolitics
underscores the need for a holistic perspective and close collaboration between
industries and governments.

Amidst the multitude of geopolitical risks spanning the globe, the absence of a
formal framework for managing such uncertainties is evident. Recognizing the
critical need for such a framework, businesses are proactively developing
specialized strategies to navigate these complex challenges. This
comprehensive approach, extending its reach to governments, financial
institutions, and relevant entities globally, is an absolute imperative. The
framework should encompass aspects such as organizational ideology,
corporate diplomacy, public opinion, supply chain volatility, ethical business
practices, cultural sensitivity and diversity, and talent and human resource
management. It represents a significant milestone in ensuring economic stability
and fostering international collaboration in the face of geopolitical uncertainties,
instrumental in guiding businesses' decisions and strategies, ultimately
enhancing their resilience and preparedness in a world characterized by
geopolitical ambiguity. Its establishment signifies a pivotal step towards
addressing the evolving landscape's demands and benefiting all sectors of
industry and commerce.

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Geopolitical Risks in Business

Authored by

Surbhi Sharma, Intueri Consulting

surbhi.sharma@intuericonsulting.com

Ishasree Mukherjee, Intueri Consulting

ishasree.mukherjee@intuericonsulting.com

Any reproduction or reuse of the contents in this document without

prior consent is strictly forbidden.

© 2023 Intueri Consulting LLP

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