The political risk loss acceptance phase
As the 2020s dawned, there was perhaps a tendency toward denial. In our 2020 survey, only 30% of respondents said they were concerned about the risks of political violence. Three years later, as the conflict in Ukraine intensified dramatically, 50 percent of those surveyed said they had suffered a real loss from the peril.
Similarly, in 2022, respondents said they were more concerned about political risk in Asia than in Europe, even though the survey was conducted as Russian troops massed on the Ukrainian border. In 2023 and this year, somewhat delayed, concerns about political risk in Europe have dominated the charts.
If we are allowed to read a story in the trends in our survey numbers over the past seven years, between 2022 and 2023, many of our respondents have gone from denial to shock. According to our survey, losses from political risks of all kinds soared in 2023 (not just political violence). The impact of the Ukrainian conflict was felt through currency inconvertibility (transfer restrictions were imposed on Russian rubles and the Ukrainian hryvnia), through increased losses attributed to Western sanctions, and even a slight increase in expropriations (the Russian government having nationalized foreign investments). .
It is perhaps understandable that in the 2023 survey, shocked respondents tended to see impending doom around every corner. For every geopolitical trend we surveyed, nearly half of our sample said the trend would “strengthen significantly.” This may be an overreaction, given that we asked about a diverse set of trends ranging from populism to a political focus on inequality.
Perhaps we could say that in this year’s survey we are reaching the phase of accepting the loss of political risk? “There is perhaps a greater awareness… of “black swan events” – those which can be envisaged but not predicted – and therefore a greater awareness of how to envisage this type of event and how to Establish business systems that would prove resilient in such cases. ” as one of our in-depth interviewees put it, in the US food and beverage industry.
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When I started working for my company a few years ago, geopolitical risk was actually a secondary consideration behind, say, market intelligence.
Person interviewed as part of the investigation
| Health sector
“When I started working for my company a few years ago, geopolitical risk was actually a secondary consideration, for example, behind market intelligence,” said one healthcare interviewee. “Since then, the COVID-19 pandemic, the war between Russia and Ukraine, and the situation around Taiwan are prime examples of what has made geopolitical risk functions much more recognized and important in policy thinking. the company. »
