From Blind Spots to Insights 2025

Companies are increasingly moving to adopt methods that governments have employed for years, especially for assessing the longer-term implications of geopolitical trends. Several interviewees reported that their companies undertake scenario planning initiatives. Some acknowledged that they emulate the better practices of scenario planning employed by governments, international organizations and leading independent experts in the field. One interviewee noted that their company deploys an “iceberg model” to differentiate between geopolitical drivers and events with an eye to identifying possible “no regret moves”, in addition to informing strategy development. Another interviewee emphasized the importance of articulating underlying assumptions, thinking through possible sequences of outcomes and moves and associated feedback loops and then assessing plausibility. Yet another interviewee called for imagination in identifying scenarios, which should draw from a wide range of sources, including fiction. Scenario planning initiatives were complemented by strategic simulations of specific contingencies, most notably assessing the impact of a potential conflict in the Taiwan Strait. Identification of emergent challenges through horizon-scanning is another tool mentioned by one interviewee.2.4 Public sector best practices and scenarios The companies interviewed differ in the degree to which insights gleaned from exposure analysis and tracking are internally communicated and preserved for future recollection. Effective internal communication of geopolitical assessments has been raised as an important factor in the risk management process. Some companies use regularly recurring (e.g. quarterly) reporting cycles to inform management about geopolitical issues potentially affecting the firm. Others noted that insights tend to be shared among ad hoc networks of executives interested in geopolitics. Membership of such networks ebbs and flows. Some companies also integrate the longer-term geopolitical scenario planning directly into the strategy development process. Few of the companies interviewed have already established information systems that store both tracked developments and the assessment of them. In other cases, institutional memory effectively depends on the retention of individual team members. The unclear boundary between geopolitical factors in particular and corporate political risk in general has raised important questions for who is ultimately assigned responsibility for operationalizing a company’s geopolitical radar. Our interviews revealed tracking and assessment of geopolitical factors being undertaken by compliance teams, corporate strategy teams, government affairs teams, sourcing departments and legal functions, as well as by teams dedicated to assessing geopolitical factors, again attesting to a multiplicity of approaches rather than a universal practice. When a dedicated team is not created, assignment of the geopolitical radar to an established unit carries the risk that the inherited practices and contacts of that unit unduly influence which factors get tracked, which third parties get consulted and the conduct of exposure assessments. For example, in some cases compliance teams can be blind to the opportunities created by geopolitical events, focusing instead on adherence to existing sanctions regimes and the like. Equally, centralized corporate strategy teams may not have access to the granular data on sourcing practices, for example, that allows for effective exposure assessment. When a dedicated team is established to manage the geopolitical radar, identification of relevant geopolitical factors will still involve others within the company, such as when the CEO meets senior politicians or when managers in national business units engage with stakeholders far from the company headquarters. This in turn requires an understanding that associated insights should be shared. The dedicated team may also provide guidance as to which factors to keep an eye out for. The execution of the geopolitical radar of an international business is inherently a joint responsibility. The relationship between the tracking and assessment of geopolitical factors and a company’s enterprise risk management (ERM) system was mentioned in several interviews. Given the former’s salience in recent years, it is not surprising that certain multinationals now include geopolitical risk in their ERM. However, concerns were expressed that, all too often, those responsible for ERM are more comfortable with directly quantifiable risks (such as certain financial risks) and that geopolitical factors are less amenable to such quantification.2.5 Internal organizational considerations The unclear boundary between geopolitical factors and corporate political risk has raised important questions for who is ultimately assigned responsibility for operationalizing a company’s geopolitical radar. From Blind Spots to Insights: Enhancing Geopolitical Radar to Guide Global Business 13