Our analytical coverage is organized across three dimensions: systemically relevant geopolitical arenas, sectors, and policy instruments enabling governments to intervene in markets in the pursuit of wider geostrategic interests.
Global interdependence requires more sophisticated corporate macro risk management capacity
One of the key lessons learned from the COVID-19 pandemic is that global macro risks in today's interdependent world travel much faster and easily through the global system. As the very behavior of global risks changes and the global risk environment transforms, companies are challenged to develop much more sophisticated approaches to identifying, assessing and responding to risks.
The incoming Biden administration: shifting the corporate geostrategic outlook
Beyond current events that shake the very foundation of U.S. democracy, the incoming Biden administration will shift the geostrategic outlook for the global corporate community. U.S. companies will benefit from a fresh impulse provided by a new dimension of American “soft power”. Chinese companies will face a less extrovert, but not less determined Biden administration countering the trajectory of a global rebalancing dynamic. European executives will be torn between the attractiveness of rebuilding transatlantic relations, including the development of a transatlantic economic space, and the growth dynamic in China and wider Asia.
What the LVMH / Tiffany case says about the importance maintaining a proper macro risk register
In November last year, LVMH, the global luxury group, announced that it would acquire Tiffany, the global luxury jeweler. Celebrating the deal, LVMH was looking forward for Tiffany to be thriving as part of LVMH's portfolio of brands for centuries to come. But then came the Covid-19 pandemic. One year later, LVMH filed a lawsuit against Tiffany, suggesting that with Covid-19 a "Material Adverse Effect" had occurred, preventing it to close the acquisition.
From de-coupling to loose coupling
De-coupling has become a global buzz concept for describing the trajectory of the future shape of the global economy. But in between the interdependent global order of the past, and the prospects of a de-coupled one, we believe that balancing the returns generated by global integration with its risks will result in an order that is best described as “loosely coupled.” A loosely coupled world will look more fluid, oscillating between fragmentation and integration, between self-sufficiency, autonomy and cooperation. It will be built around risk perceptions and the confidence that its different players place into their risk management capabilities, but also trust into the integrity of their partners.
Geopolitical competition and the global semiconductor industry
The global semiconductor industry finds itself at the center of the geopolitical competition and the race for influence in the age of the 4th Industrial Revolution. Control over tech assets has become a key currency in the power play between the U.S. and China, with Europe in a position to shift the balance. The struggle for dominance will be a constant theme of the 21st century geoeconomic agenda, and as such a challenge for corporate strategy.
Tech and venture capital: what's the social and political end game?
Venture capital firms have left a huge footprint on the global economy of this still young 21st century. They have been first investors in today's tech icons such as Google, Twitter, Facebook, Uber and many other global tech companies. And as such they have shaped the business models, cultures or values of companies who today transmit these into the global economy, given their global presence. As the Belfer Center for Science and International Affairs at Harvard Kennedy School suggests, venture capital firms are investing in frontier technologies with potential to be disruptive to global security, public health, democracy, and many other areas of society. Though some investors might be attracted by the buzz around the concept of "disruption", long term oriented ones should account for the risks that an exclusive focus on disruption could bring about and think through how tech can generate longer term financial and societal value.
Robust AML compliance management is an essential risk management practice
As the global economy is struggling under the pressure of rising Corona infection rates, pressure on banks intensified after the International Consortium of Investigative Journalists (ICIJ) and other media groups alleged that global banks had flagged up suspicious transfers worth more than $2tn to US anti-money laundering authorities between 1999 and 2017. The scale of the operations clearly indicate that banks and regulators need to scale up their AML compliance practices and supervisory capabilities.
U.S. - China relations
The outcomes of the great power competition between the U.S. and China are going to determine the shape of the operating environment of the global business community over the coming decades. At the same time, we don't believe that comprehensive "decoupling" is likely to be in the cards, as many commentators suggest. We rather argue that both sides are locked in a situation of "strategic interdependence".
Companies are getting serious about geopolitical risk
As global markets morph from return driven playing fields turn into power driven battle grounds, and corporates feel the squeeze of geopolitical tensions in their different manifestations more directly, a sense of urgency is building across executive leadership to take a stand – dismissing geopolitics as noise that the company will have to live with, or taking on geopolitics as an increasingly significant force shaping a company’s operating environment, and as such a systemic driver of risk to corporate performance in its different qualitative and quantitative dimensions.
The role of boards in geopolitical risk management
Sitting on a privileged vantage point, bringing together an external, holistic view on the interaction between geopolitics, economies, and the competitive landscape, and an internal “whole of firm” angle, boards are best positioned to build a strategic perspective on geopolitics, assess the wider exposure of a company to a shifting geopolitical landscape, align geopolitical exposure with corporate positioning and strategy, and provide agility and alertness responding to geopolitical risk events.