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Vernünftiges Risikomanagement im Zeichen geopolitischen Wandels
In der Rückschau markiert 2022 das Jahr, in dem die Geopolitik von der Peripherie wieder ins Zentrum internationaler Beziehungen gerückt ist und die Zeiten, in denen die deutsche Wirtschaft beträchtliche Wohlstandsgewinne in einem geopolitisch ausserordentlich freundlichen Marktumfeld erwirtschaften konnte, beendet hat. Die Epoche der Globalisierung internationaler Güter-, Dienstleistungs- und Kapitalmärkte wird durch eine Epoche abgelöst, in der politische Polarisierung und Systemwettbewerb, die Durchsetzung militärischer und wirtschaftlicher Sicherheitsinteressen jenseits eines allgemein akzeptierten Handlungsrahmens wieder zum dominierenden Merkmal internationaler Beziehungen werden – mit tiefgreifenden Konsequenzen für die Weltwirtschaft, für Wachstum, Preisentwicklungen, Geld- und Fiskalpolitik - und nicht zuletzt für die Erfolgsaussichten international operierender Unternehmen.
Aus dem Wandel der globalen Wirtschaftsordnung entsteht auch ein neuer Referenzrahmen und damit ein enormer Anpassungsdruck für international operierende Unternehmen – also genau denjenigen Akteuren, die die wirtschaftlichen Globalisierungsprozesse der letzten 30 Jahre substanziell vorangetrieben und mit Leben gefüllt haben.
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Uniper’s Risikomanagement: Verletzung der Sorgfaltspflicht?
Die drastische Reduzierung der Gaslieferungen Russlands nach Deutschland im Rahmen der Ukrainekrise hat zu einer deutlichen finanziellen Schieflage des Energieversorgers Uniper geführt. Angesichts der systemischen Bedeutung von Uniper für die Sicherstellung der nationalen Energieversorgung konnte sich die Bundesregierung der Finanzierung Deutschlands größten Gasimporteurs letztendlich nicht entziehen. Der Bund wird nach einer Kapitalerhöhung und Übernahme der Anteile des vormaligen Besitzers Fortum das Unternehmen vollständig kontrollieren und weitere Liquiditätslücken decken. Damit steht Uniper in einer Reihe mit anderen, durch die Intervention der Bundesregierung in Folge des Eintreffens eines systemischen Risikoereignisses prominent gestützten Unternehmen, wie die TUI und die Lufthansa in Folge der Corona-Pandemie oder die Commerzbank in Folge der Finanzkrise 2008.
Die aufarbeitende Frage stellt sich aber nunmehr, wie Uniper sein strategisches Umfeld und die sich daraus ergebenden Risiken vor den russischen Einmarsch in der Ukraine bewertete und welche Schlussfolgerung durch das Management im Rahmen der gesetzlichen Vorgaben hinsichtlich eines leistungsfähigen Risikomanagements gezogen wurden - und damit angesichts des Falls die weitergehende Frage Uniper nach den Lehren für in einem zunehmend komplexen geopolitischen Umfeld tätige deutsche Unternehmen.
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Konzeptionelle Lehren aus der Coronakrise
Vor 15 Jahren veröffentlichte das Weltwirtschaftsform in seinem ersten „Global Risk Report“ eine Bewertung der für Wirtschaft, Politik und Gesellschaft drängendsten globalen Risiken und entwarf unter anderen folgendes Pandemieszenario: “If person-to-person infections were to become commonplace, the vulnerabilities of our interconnected global systems would intensify the human and economic impact. A lethal flu, its spread facilitated by global travel patterns and uncontained by insufficient warning mechanisms, would present an acute threat.” Das Weltwirtschaftsforum kam auch zum Schluss, dass “the longer it takes for a pandemic to emerge – as long as we maintain awareness of the risk – the better prepared we are likely to be.” Mit dem Pandemieszenario lag das Weltwirtschaftsforum richtig. Mit der Erwartung, dass die globale Gesellschaft besser vorbereitet sein würde, je länger die Vorbereitungszeit bis zum Ausbruch einer Pandemie wäre, allerdings falsch.
Aber irgendwann wird die Corona-Pandemie überstanden sein und eine Diskussion geführt werden müssen, wie zukünftige Makrorisiken besser antizipiert und so bearbeitet werden können, dass sie nicht wie so häufig in den letzten 15 Jahren wieder in einer Krise enden. Wir müssen schlicht besser werden, die Wahrnehmung einer diffusen Risikolage in eine strategische Perspektive auf unser Risikoumfeld zu entwickeln. Das gilt für Bund und Länder genauso wie Unternehmen und andere gesellschaftliche Akteure. Sechs Fragestellungen sind dabei von zentraler Bedeutung.
Wie kann, erstens, der Raum geschaffen werden, in dem sich der Blick auf Makrorisiken zunächst weitet und nicht wieder verengt? In den letzten Jahren wurden die globale Finanzkrise, die Flüchtlingskrise und jetzt die Corona-Pandemie auch als Ereignisse bezeichnet, die man nicht hätte voraussehen können – als sogenannte «Schwarze Schwäne». Wir werden mit Sicherheit unsere Lehren aus der jetzigen Pandemie ziehen und das nächste Mal besser vorbereitet sein. Wir «können» in der Zukunft also Pandemie oder sollten es zumindest können. Aber wie vermeiden wir, dass sich unser Blick auf die Erfahrung der gerade gelebten Krise verengt? Winston Churchill wird die Erkenntnis zugeschrieben, dass «Generäle immer darauf vorbereitet sind, den letzten Krieg zu führen». Die perspektiverweiternde Frage ist also eher, ob wir «Risiko können». Oder anders gesagt, wie können wir vermeiden, dass sich in Zukunft nicht wieder irgendein Risiko einstellt, auf das wir unvorbereitet sind, welches man aber mit mehr Willen und vor allem einem weiteren Blickwinkel hätte antizipieren und damit besser bewältigen können – bevor es sich zur Krise auswächst?
Die Krisenerfahrungen der letzten 15 Jahre haben deutlich gemacht, dass – zweitens – die Risikoexposition Deutschlands immer international bzw. global durchdacht werden muss. Globalisierung hat im gewissen Sinne die Autobahnen geschaffen, auf denen sich Risiken mit einer hohen Geschwindigkeit über grosse Distanzen fortbewegen können – nicht nur im geographischen Sinne, sondern auch über Systemgrenzen hinweg. Die Pandemie zeigt ja ganz deutlich, dass sich ein Infektionsrisiko recht schnell in wirtschaftliche, politische oder gesellschaftliche Risiken und folgende Krisen wandeln kann, also Systemgrenzen überwindet. Inwiefern muss sich also Risikoantizipation und - bewertung diversifizieren, um der durch die vielschichtige globale und systemische Vernetzung entstehenden Komplexität gerecht zu werden? Oder anders ausgedrückt: Es gibt heute wohl nichts Trivialeres, als zu bemerken, dass der vielzitierte Sack Reis, der in China umfällt, katastrophale Folgen weit jenseits haben kann.
Wenn wir drittens davon ausgehen, dass die Risikolage so bleibt wie sie ist, das heisst für Deutschland und Europa latent angespannt: wie schaffen wir es, eine stabile Balance zwischen Resilienz und Effizienz zu finden? Unter Effizienzgesichtspunkten entsteht durch das Vorhalten von Puffern, die die Konsequenzen von Risiken abfedern, oder das Einrichten von alternativen Versorgungssystemen, unproduktiver «organizational slack». Sie sind aber überlebenswichtig, wenn es um die Bewältigung von Krisen geht und Staat und Gesellschaft wieder funktionstüchtig zu machen. Wie lässt sich dieses Spannungsverhältnis zwischen Effizienz und Resilienz auflösen, oder zumindest konstruktiv gestalten? Welches sind Konzepte der «smarten» Risikobewältigung und inwiefern entstehen aus der konzeptionellen Beschäftigung mit dem Spannungsverhältnis zwischen Effizienz und Resilienz möglicherweise neue, innovative Formen des Risikomanagements?
Wie schaffen wir es, viertens, dass die Aufmerksamkeit für das Thema Risikomanagement nicht wieder abflacht, wenn wir die derzeitige Corona-Pandemie einigermassen in den Griff bekommen haben werden. Christine Lagarde in ihrer ehemaligen Rolle als Chefin des Internationalen Währungsfonds hat im Nachgang zur Finanzkrise darauf hingewiesen, dass man das Dach reparieren sollte, wenn die Sonne scheint. Nur ist aber das Interesse, das Dach dicht zu halten in sonnigen Zeiten ziemlich mau. Die Diskussion über Risikomanagement und Krisenbewältigung hat dann schlicht keine Konjunktur. Oder, um diese Diagnose in einen Managementkontext zu bringen: Das Leben eines Chief Risk Officers kann sehr lange sehr einsam sein. Das hat aber zur Konsequenz, dass die Verwundbarkeit eines Staates, eines Unternehmens oder einer Gesellschaft steigt. Wie schaffen wir es also, eine angemessene Aufmerksamkeit für sich möglicherweise zukünftige materialisierende Risiken aufrechtzuerhalten, ohne in einer permanenten Alarmbereitschaft zu erstarren?
Fünftens scheint es, dass zentrale politische und gesellschaftliche Akteure über eine nur ungenügend ausgebaute gemeinsame konzeptionelle und kommunikative Grundlage für das effektive Management der Corona-Krise haben. In der Privatwirtschaft gewöhnlich angewandte Risikomanagement-Standards, wie die «ISO 31000 Risk Management Guidelines» oder das «Enterprise Risk Management Framework (ERM)» des «Committee of Sponsoring Organizations of the Treadway Commission (COSO)» scheinen in Politik und Verwaltung bislang geringe Resonanz zu haben. Damit bleiben Konzepte ungenutzt, mit denen sich öffentliche Risikomanagementkapazitäten ausbauen liessen. Aus der Wirtschaft ist auch immer wieder der Vorschlag der Einrichtung eines «Chief Public Risk Officers» als gesonderte Regierungsfunktion vorgeschlagen worden. Auch das wäre ein Ansatz, der zur Stärkung der Krisenprävention und Resilienz von Staat und Gesellschaft beitragen würde.
Es gibt, sechstens, grundsätzlich immer fünf Ansätze mit denen Risiken angegangen werden können: man kann sie vermeiden, was allerdings in hochvernetzten Volkswirtschaften wie der Deutschen nur schwer durchzuhalten ist. Man kann Risiken verkaufen, das heisst an einen Versicherer abtreten – was im Falle eines globalen Risikoevents ebenfalls kaum möglich ist. Man kann drittens die Eintrittswahrscheinlichkeit eines Risikos verringern (Stichwort Klimawandel) und viertens, das Schadensausmass durch die Bereitstellung von Puffern verringern, wie geschehen durch die Corona-Hilfen. Schlussendlich kann man sich auch entscheiden, schlicht mit bestimmten Risiken zu leben, wobei dann auch klar sein sollte, wie gross die kollektive Risikotoleranz ist und an welchen Indikatoren sie sich orientiert. In der Corona-Pandemie haben sich Politik und Gesellschaft beispielsweise darauf verständigt, dass dieser Indikator die Auslastung des Gesundheitssystems ist und andere Indikatoren, wie Beispiel die absolute Anzahl der Opfer, eher zurückstehen. Welche Risiken bearbeiten wir also wie? Welche wollen wir verkaufen, vermeiden, verringern, und welche wollen, bzw. müssen wir schlicht akzeptieren und mit ihnen leben?
Die Ampelkoalition hat es sich zur Aufgabe gemacht «mehr Fortschritt zu wagen». Mehr Fortschrift ist dringend nötig, wenn es darum geht, die Diskussion um die Bewältigung globaler Risiken auf eine strategische Ebene zu bringen, um sie danach operationalisieren zu können. Nach der Finanz-, Flüchtlings- und nunmehr der Corona-Krise können wir es uns schlichtweg nicht mehr leisten, dass sich globale, strategische Risiken in neue Krisen entwickeln.
The Ukraine Crisis and Possible Sanctions Against the Bank of Russia
The likelihood of a military aggression of Russia against Ukraine, and potentially other targets, is growing daily. Beyond discussions about adequate diplomatic and eventually military means to counter a potential Russian incursion, the discussions about the suitability of economic sanctions to deter Russia from further escalating the already tense situation in Eastern Europe, or to implement them should Moscow take military action, has gained significant traction. Various options have been thrown into the conversation, including cutting Russia off from the SWIFT global payment system or cutting back gas imports, most notably by preventing Nord Stream 2 to begin operating.
An additional component of a Western sanctions policy could be blocking the financial assets the Government of the Russian Federation holds abroad. Such a move could have significant consequences for the Russian banking system and the overall state of the Russian economy. Though this might not be sufficient to deter Moscow from military action against Ukraine, it is likely to be a necessary component of a more forceful reaction. It would constitute a substantial escalation and potential end point of a targeted financial sanctions campaign, though needs to be embedded in a wider sanctions strategy. Western governments have repeatedly claimed that Russia would pay a “high price” if it took military action against Ukraine. Effectively freezing the financial assets the Russian Federation holds offshore might be part of the price Western governments have in mind. Such action would target the assets of the Bank of Russia, the central bank of the Russian Federation, including those of the National Wealth Fund, the stabilization fund of the Russian Federation operated by the Ministry of Finance and used to stabilize the Russian economy in times of distress.
We estimate that the Bank of Russia’s holds 622.3 billion USD in foreign currency and gold assets as of early January 2022. These include assets we estimate to be worth 128.3 billion USD held in an account of the National Wealth Fund, the stabilization fund of the Russian government operated by the Russian Ministry of Finance. Of that total amount, we believe that 278.2 billion USD are within the reach of an action by the U.S., Western European governments (Germany, France, the United Kingdom, and Austria) and Japan blocking the foreign currency assets of the Bank of Russia.
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Case study: Daimler's pivot to China
Throughout its history, the fortunes of the car manufacturer Daimler have been driven by the dynamics of the geopolitical dimension of its operating environment. It is historically rooted in a distinct German economic, political and not least social setting, driving its overall value orientation and business philosophy. For decades, and indeed for just under a century, Daimler in its many different constellations has been a European leader in mobility technologies, building on a regional ecosystem of technological know-how, ingenuity and entrepreneurship. By the turn of the century, Daimler’s commercial orientation opened up towards the wider transatlantic economic and political space, driven by its merger with the U.S. car manufacturer Chrysler. Over the past ten years, Daimler’s geographic exposure has shifted again quite profoundly. Daimler – like others – has clearly been pivoting towards Asia, and more specifically towards China. Beyond Europe and the U.S., China has become its third commercial anchor – in consequence, its global presence reflects very much the tripolar organization of the international system. Daimler's journey from a German, European, transatlantic player towards a company that is focused on the Eurasian space is nothing less than remarkable. This transition challenges its leadership to navigate a much more diverse and complex geopolitical risk environment.
Since the fall of the Berlin Wall and in most of the 1990s, Daimler generated the bulk of its revenues in Germany - roughly 30 to 40 percent - and Europe, whilst North America contributed less than 20 percent and revenues generated in Asia remained peripheral. This changed significantly when Daimler decided to merge with the U.S.-based automaker Chrysler in 1998 into DaimlerChrysler. After the world’s largest ever cross-border deal at the time, the combined company developed a particularly strong market presence in the Transatlantic space where it now was able to generate over 90 percent of its total revenues.
Daimler’s liaison with Chrysler, however, did not last very long. After an initial boost, between 2000 to 2005 revenues in the U.S. eroded by nearly 10 percent, prompting Daimler’s leadership to dispose of Chrysler again. In consequence, revenues in the U.S. dropped from over 40 percent to somewhat more than 20 percent. Yet at the same time, revenues in Asia began to pick up and for the first time in Daimler’s history reached more than 10 percent in 2006, turning into a strongly growing revenue driver from then onwards. In retrospect, the sale of Chrysler can be considered as the turning point in Daimler’s global market presence, driving its strategic outlook today. Its sluggish revenue performance in Europe and the U.S. – though regaining some strength in the second half of the 2010s - began to be balanced out by growing demand from consumers in the East. Sales growth in East Asia was temporarily complemented by a strong performance in the Gulf region when the oil boom of 2008 to 2014 increased Daimler’s customer base in the region’s oil rich economies. Revenues in wider Asia grew within five years from 8.5 percent in 2005 to over 20 percent of total revenues in 2010.
Throughout the second half of the 2010’s, Daimler consolidated its revenues in Europe which remained stable at around 40 percent and rebuilt its market presence in the U.S. with around 25 percent of total revenues. Significant relative growth, however, came from China. From 2010 onwards, Daimler’s management considered China to represent a market distinct from the rest of Asia, gradually building out its share of Daimler’s total revenue from 9.8 percent in 2015 to 11 percent in 2019.
2020, the year of the global Covid-19 pandemic, saw economies around the world in a deep economic crisis. Necessary instruments deployed by public authorities to confront the pandemic transformed a health hazard into a risk for global markets with catastrophic consequences for the world economy. Annual global growth contracted by more than 3 percent. Yet, with 2.3 percent growth, China was the best performing major economy in 2020 - in turn resulting in increasing China’s share of Daimler’s total revenue from 11.0 percent in 2019 to 13.8 percent in 2020, further tilting the balance of Daimler’s revenue portfolio in favor of the wider Asian market.
Thus, within just over 20 years, Daimler’s revenue portfolio has gone through a significant transformation. When the Transatlantic area generated most of Daimler’s revenues by the turn of the century, with Asia only making a peripheral contribution, two decades later, Asia’s share has increased to over 25 percent, half of which generated in China. Daimler’s revenues in the Transatlantic space contracted to below 70 percent. Also, after a promising performance in the early 2010s, the share of markets outside the Transatlantic or Asian space, such as the Middle East or Africa, fell significantly. Today, Daimler’s revenue portfolio has assumed a decidedly tripolar composition, with Europe in the lead, the U.S. losing some ground, and China catching up.
The year 2021 again will represent a turning point in Daimler’s history - a history that has seen so many twists and turns across the past decades. In the coming months Daimler plans to spin off its truck and bus business in form of Daimler Truck Holding AG and reposition its car and van business as a pure play luxury car company, to be renamed Mercedes-Benz Group AG. Like the numerous other strategic transactions in Daimler’s past, the move follows an industrial and entrepreneurial logic, but will have significant consequences for its geostrategic outlook.
The most obvious one is that the revenue exposure of the future Mercedes-Benz Group will further shift to the East. In 2020, revenues of Daimler’s current Mercedes-Benz Cars & Vans business segment generated in Asia reached over 32 percent of its total revenues, roughly eight percentage points more than the total of the Daimler Group (excl. Daimler mobility), and only 17.8 percent in North America, roughly six percentage points less than the Group total. In other words, the Mercedes-Benz business generated 15 percent more revenue in Asia than in North America. Europe remains Mercedes-Benz largest market with over 43 percent of total busi-ness segment revenues. Revenues in Europe exceeded those of the Daimler Group by six percentage points.
Based on these numbers and assuming that the revenue profile of Mercedes-Benz will more or less resemble the geographic revenue distribution of the current Mercedes-Benz Cars & Vans business segment, it is plausible to assume that Mercedes-Benz will face a distinctive Eurasian outlook, where over 75 percent of its revenues will be generated. Though still relevant, North America will lose in significance. Daimler Truck, to the contrary, can be expected to be more oriented towards the Transatlantic space. Daimler Trucks & Buses generated most of their revenues, just below 40 percent, in North America, followed by Europe with 32 percent and only 17 percent in Asia.
There is, per se, nothing dramatic about rebalancing strategic priorities and following commercial opportunities wherever they are opening themselves. China is now the world’s most dynamic economy and its most important auto market. What makes Daimler’s pivot contentious however, is that its strategic priorities have steered it away from its focus on the Transatlantic arena which in geopolitical terms has been relatively benign, and with which Daimler’s overall value orientation has been very much in synch, towards an arena whose political grounding differs profoundly from that of Daimler’s home base, and which is increasingly susceptible to turning more competitive and indeed confrontational. Extrapolating from Daimler’s current expansion dynamic, it also remains uncertain whether the tripolar organization of its commercial presence represents merely a transitional period on its way towards a continued expansion into Asia at the expense of its European and American pillars. In other words, what is the end game for Daimler’s position in China? And how does Daimler’s overall pivot to China mean for the organization of Daimler itself? Addressing these issues will be essential to consolidate Daimler's status of a global leader in the automotive industry.
U.S. - China Relations: Navigating Strategic Interdependence
After a period of rapprochement between the U.S. and China dating back to the 1970s, the past few years saw relations between the world’s two largest economies turn significantly more competitive. Today, the U.S. and China find themselves tied together in a situation of strategic interdependence. On the one hand, economic and investment relations pull them together; on the other, great power rivalry and the confrontational politics that comes with it, is pushing them apart. That strategic interdependence is going to determine policy outcomes in the Sino - American policy arena for years to come, and sets the backdrop against which commercial actors need to devise their strategic growth and risk management agendas.
Over the past decades the U.S. has built its international standing on its ability to translate economic potential into political power, on its innovation advantage over the rest of the world and on its capacity to shape the global ecosystem of formal and informal norms and institutions, thereby setting the key rules of international conduct. Today, China challenges U.S. global leadership in each of these domains. Its continuously growing domestic market and an expanding web of transcontinental trade and investment relationships translates into mounting political leverage. It emerges as a leading player in foundational technologies from artificial intelligence to quantum computing to biotechnology, advancing its objective to reach tech-superpower status. And it has moved filling the vacuum left by the Trump administration in international institutions and other fora, positioning itself in a more central role in international standard-setting processes.
In the meantime, the U.S. has come to the conclusion that its working hypothesis held in dealing with Beijing over the past decades, China transforming and becoming more liberal and democratic as it responds to the political demands of a more affluent middle class and is increasingly exposed to Western norms and values, is not working out as anticipated. China remains run by a single party with a strong state maintaining a firm grip on its economy, its political institutions and society. Consequently, ideological competition prevails and American and Chinese prosperity models continue to rest on very different foundations.
Yet, the respective success of these respective models - liberal capitalism and a mix of state capitalist and planned economy - depends on each power’s capacity to exert influence over the rest of the world or parts thereof, dominating markets abroad and building and maintaining authority over the international network structures through which money, goods, and information circulate. The U.S. has done so by setting the building blocks of the rules-based international order which has governed world affairs over the past decades – not always, but often to its advantage. China’s long game is to gradually replace the U.S. as that sponsor of global order and rewire it in a way that is more compatible with its own form of governance, and that provides for a more favorable setting for its commercial ambitions.
In the meantime, the global policy discourse has referred to increasingly competitive U.S. – China relations as an emerging ‘Cold War’. Whether the historical reference to the nature of affairs between the U.S. and the Soviet Union for much of the second half of the past century is fully adequate, is a matter of debate. Yet, the one element that can be usefully lifted from the Cold War experience to better capture today’s great power conflict dynamic is the concept of strategic interdependence. At its very essence, strategic interdependence describes a situation in which no actor is able to accomplish what he/she wants without taking into account the policies and behavior of his/her counterpart. In other words: one’s fortunes depend on what the counterpart does.
Strategic interdependence between U.S. and the Soviet Union was anchored in a military security setting, with the concepts of nuclear deterrence and mutual vulnerability providing its core reference points. Strategic interdependence defining 21st century Sino – American relations finds its grounding in the high degree of economic integration built during the past two, three decades - before relations turned sour. Today, China is the largest U.S. goods trading partner, the third-largest U.S. export market and the largest source of U.S. imports. U.S. investors hold $100 billion of Chinese debt and $1.1 trillion in Chinese equities, Chinese investors hold $1.4 trillion in U.S. debt and $720 billion in U.S. equities. With over $1 trillion, China is the second-largest foreign holder of U.S. Treasury securities. True, U.S. – Soviet antagonism put the physical survival of millions at stake, and as such had a much more existential dimension. Yet today, it is rather obvious that without some form of economic cooperation, neither the U.S. nor the Chinese prosperity model will be able to accomplish their objectives.
Strategic interdependence is not a static description of a status quo. It is a concept that allows alternative scenarios to materialize – which are best extracted by reference to a classic Prisoner’s Dilemma which confronts two players with the choices to either cooperate (C) or defect (D) when dealing with each other and advancing their interests. Based on these options and their combinations, the Prisoner’s Dilemma suggests U.S. – China relations to evolve into one of four scenarios.
The first two are anchored in the desire of each party to prevail. Yet, both are fairly unlikely: it is unlikely that the U.S. will eventually leave its global leadership role to China (though, ironically, the ‘America First’ aspirations of the Trump administration left the door wide open for that scenario to materialize). Likewise, it is not very likely that China allows itself to be reined in by the U.S. which it sees in decline.
A third plausible outcome could materialize in form of a comprehensive and strategic ‘Grand Bargain’, a bargain that would provide a common reference point resolving conflict and govern relations for years and decades to come. And indeed, both sides need to carefully looking at options that would allow them to break out of the current tit-for-tat conflict dynamic and work towards a scenario which is both in their individual and collective interests.
It is not very likely that such a cooperative outcome will be reached anytime soon. Therefore, as both promote and work towards outcomes placing them at the top of the table, a ‘Stalemate’ is the most likely one - which again can take several forms. In its ‘Worst Case’, a stalemate scenario degenerates into a military confrontation. In its best form, the two sides settle on a fragile equilibrium in form of a ‘Cold Peace’ with both respecting ‘light touch’ formal and informal rules of the game.
This suggests that for the time being, U.S. – China relations will be defined by a continuous process of implicit and at times explicit negotiations in which the red lines of the competitor are being tested, vulnerabilities explored, and relative competitive advantage is sought. And the central location in which that process is going to play out is the economic dimension of U.S. – China relations. This is not to say that other U.S. – China policy arenas will be spared. But focus on economic affairs in a way allows both sides to contain the conflict, to somewhat isolate it, before it spills over into a military dimension. It is thus the logic of strategic interdependence in Sino – American affairs that is going to provide the backdrop against which global economic and wider political order is going to unfold. What new equilibrium it will evolve into will not only shape bilateral relations, but will have significant consequences for global order at large.
 Hal Brands and Jake Sullivan. China Has Two Paths to Global Domination. Foreign Policy, May 2020.
 Heiko Borchert. Looking Beyond the Abyss. Hedge21, April 2020.
 Henry Farrel and Abraham Newman. Weaponized Interdependence. International Security, 44:1.
 See Thomas Schelling. The Strategy of Conflict. Harvard University Press, 1960.
 Congressional Research Service. U.S. – China Trade Relations, February 2021.
Balancing Efficiency and Resilience in the Post-Covid-19 Era
As the global community muddles through the fog of uncertainty of the Covid-19 pandemic, much of the post-Covid-19 debate will focus on getting the balance right between resilience (a system’s or entity’s capacity to absorb stress, recover critical functionality, and thrive in altered circumstances) and economic efficiency (the optimal allocation scarce resources in the production process while minimizing redundancies and waste).
Evidently, during the past decades public and private sector actors have very much focused on increasing economic efficiency as the key instrument for maintaining and building out national or corporate competitiveness, securing commercial success and economic prosperity. Global risk awareness fell to a low point in the meantime, resulting in generally fragile resilience against adverse global risk events. This when the growing interdependencies in the global system, built out on the principle of efficiency, made it easier for risks to travel around the world and build their destructive potential along the way. Growing vulnerability as the consequence of connectivity and the under-appreciation of the global community’s collective risk exposure, in short, has been the situation at the eve of the pandemic outbreak in late 2019. In a matter of weeks, SARS-CoV-2 was able to travel the world through the highways created by globalization, hitting large parts of the global community unprepared.
The global community reacted by incrementally adapting to the new hazard. It blocked the pathways the virus used to spread by putting in place travel restrictions, shut- and closedowns, social distancing or simple measures of hygiene. It developed more promising therapeutic capabilities, capable vaccines, built production and distribution capacities. In other words, after an initial shock, global society and its individual constituents have been in the process building out ever higher levels of resilience, responding to the continued challenges posed by the virus and its subsequent mutations.
Yet, the fight against the pandemic came with tremendous costs for efficiency. Risk mitigation instruments which had to be put in place by public authorities transformed a health hazard into a risk for global efficiency with catastrophic consequences for the world economy. Global growth in 2020 contracted by more than 3 percent. Labor markets were disrupted on a historically unprecedented scale. 8.8 percent of global working hours were lost, equivalent to 255 million full-time jobs. Government support reaching trillions of dollars to mitigate the effects of the pandemic on consumption and global output resulted into estimated global public debt reaching 98 percent of GDP by the end of 2020, 14 percentage points more than the IMF had initially projected for the year. In other words, the efficient allocation of resources on the aggregate level was severely disrupted across the world economy, though playing out very differently across geographies, industries, or societies.
This is where we stand right now: At the turn of 2020/21, and despite the continued pressure of the pandemic on the health conditions in most world regions, resilience overall has profoundly increased, though it is currently unclear at what point the global community can declare victory and move on. Yet at the same time, aggregate economic efficiency levels have fallen well below the beginning of the outbreak.
Moving beyond this unsustainable situation, it is thus blatantly obvious that the resilience / efficiency debate needs to advance in two dimensions. The first is the immediate one: developing the conditions under which economic efficiency can be restored without giving up, but rather further building out resilience against the pandemic.
The second is more far-reaching and strategic: how to build the capacity on global, national and local levels of governance, across private and public sectors balancing resilience and efficiency, blending one into the other over the long run.
As said, resilience and efficiency have traditionally been seen at opposing ends of the spectrum, as antipodes. But if global interdependencies are here to stay, as they likely are, global risks remain a distinct variable determining outcomes more frequently. For many public and private entities, the pandemic has been about continuity and survival. The thought of breaking new ground now in the efficiency / resilience debate seems farfetched for those who are not in one of the few sectors that have grown since the pandemic begun. But how does one thrive in altered circumstances – circumstances that are shaped not only by the pandemic, but by the profound reconfiguration of the global risk environment, resulting from globalization processes of the past decades? And how does one build a fresh relationship between resilience and efficiency on the back of innovation? Developing a new approach in that debate will be the key for future competitiveness, and indeed collective survival.
 IMF. World Economic Outlook Update. January 2021.
 ILO Monitor. Covid-19 and the World of Work. 25 January 2021.
 IMF. Fiscal Monitor Update. January 2021.
The World Economic Forum's Global Risk Report 2021 and Strategic Risk Management in the Post-Covid-19 Era
Never since the global financial crisis has the work of the World Economic Forum on Global Risks been more relevant than today, the age of the Covid-19 pandemic. It provides a central reference point for a debate across the global community about strengthening its collective resilience confronting risks that emerge from a highly interdependent global system. And it provides such a reference point for a deeper conversation within organizations about how to operate in a more complex and riskier global setting. Yet, at the same time, it is depressing to see that the findings of the WEF’s Global Risk Program, initiated more than 15 years ago, have had only very modest policy consequences. The current pandemic is a case in point.
Back in 2006, one of the first editions of the program's annual reports argued that “if person-to-person infection were to become commonplace, the vulnerabilities of our interconnected global systems would intensify the human and economic impact. A lethal flu, its spread facilitated by global travel patterns and uncontained by insufficient warning mechanisms, would present an acute threat.”
Fast forward to 2020/21 and the pandemic outbreak scenario laid out 15 years ago is right on the mark.
But the report also suggested that “the longer it takes for a pandemic to emerge – as long as we maintain awareness of the risk – the better prepared we are likely to be.” A long time has passed since the World Economic Forum, and others, advocated for awareness of a global pandemic risk event. And whilst the global community has grown together, and whilst the resulting interdependencies have created the highways through which global risks, such as in form of the coronavirus, have been able to travel with ease and celerity, global risk awareness has been lost on the way. The supply of risk management solutions has not kept pace with the changing nature of a dynamically evolving global risk landscape. This has forced the global community and its members to fall back on the most archaic ways of all to deal with the Covid-19 pandemic: fight and flight (governments have balanced these approaches in very different ways).
This attitude will have to change. Once the current crisis will have ceased, there will be an urgent need to engage in a deeper conversation about how to confront broader strategic risks and strengthen collective and individual resilience. Christine Lagarde, then in her role as Managing Director of the International Monetary Fund, addressing the lessons from the global financial crisis, once pointedly suggested to “fix the roof when the sun is out.” The sun is not out today, and the roof is broken. But when it is out again tomorrow, building that roof must be high on the agenda.
Three points, amongst many others, should inform that endeavor.
Statecraft and multilateral diplomacy need to be adjusted to the political circumstances of the post-Covid-19 era. Though the joint experience of the Covid-19 crisis will provide a powerful reference point for stakeholders to jointly confront the vast set of global challenges emerging in the post-Covid-19 era, its transformative dynamics will make it more challenging to translate that ambition into a cooperative reality. The costs of a global risk event are never equally distributed across the global community. Countries, industries, societies or generations are experiencing the effects of the Covid-19 pandemic in very different ways. Though the global community at large is suffering, some members are suffering more than others. The unequal distribution of costs has profound consequences for economic and political fortunes, consolidating themselves in from of a longer-lasting, structural transformation. The complex and constantly shifting mix of converging and diverging interests of the post-Covid-19 era will make it difficult to form global alliances around a new equilibrium, and to work out arrangements addressing other pressing global policy challenges, such as climate change, inequality, or nuclear proliferation. It has been difficult enough to identify the lowest common denominators as the bases for collective action on these issues in the pre-Covid-19 era. The transformative consequences of the current crisis will require even more skillful mediation to arrive at a 'new deal' building the shared vantage point for the collective management of global risks.
Second, established risk management concepts need to be repositioned and more strategically used. For too long, risk management has been a fairly unpopular exercise. When the sun is out, warning about rain puts people in a bad mood. Talking risk can be depressing and suck energy out of the room. Risk management is largely seen as a cost factor. Resilience and efficiency are considered to be mutually exclusive concepts. Organizational slack and redundancies are assumed to be dead weight rather than meaningful contributions to the long-term survival of an organization. The very concept of risk is complex, and the language used by the risk management profession is highly codified. Risk management is largely seen as a decidedly specialized trade and the costs for accessing that world are considered to be prohibitively high. This is also why risk management has a difficult time finding its way into the mainstream conversations about wider policy or strategy formation. It is of note, that the Forum’s Global Risk Report does not make any reference to foundational work provided by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) or the ISO Risk Management Guidelines. Yet, this is not what the world can afford any longer. The concepts that the discipline has developed over the past decades need to be dusted off and become more accessible – they need to transcend organizational boundaries in the public and private sectors and lift the global risk conversation to another level. Risk management needs to be repositioned as a means to advance, not slow down, innovation and entrepreneurship. Efficiency and resilience should not be seen as mutually exclusive concepts but complementing each other. Indeed, thinking through what 'efficient resilience', or 'resilient efficiency' mean in the post-Covid-19 era will become a driver for innovation in its own right.
Third, the overall attitude of the business community - a key audience of the WEF's global risk work - towards strategic risk management will have to change. The Covid 19 pandemic has made it painfully clear that companies need to become more systematic and comprehensive in dealing with their operating environments in their social, technological, economic, environmental and political (STEEP) dimensions, i.e. the sources of strategic risk. For the time being, the attention of corporate risk management systems has largely focused on risks located within a company, such as compliance, health, safety or IT risks and risks in their immediate environment such as legal and regulatory, finance and treasury risks. Some industries are required to respond to a very specific set of risk management regulation, such as the banking industry. Yet, broader, strategic risks are largely considered to be peripheral to commercial success. Rarely do companies engage in their rigorous and systematic analysis - and if they do, draw the necessary conclusions and increase their resilience. The Lufthansa Group, for example, over the past years has been permanently reviewing information from the World Health Organization, the Robert Koch Institute in Germany and other institutions in order to identify risks of an epidemic or pandemic as early as possible. Despite a pandemic being clearly on its radar screen, once the Covid 19 crisis grounded air travel across the world, Lufthansa eventually had to ask the German government for a € 9bn aid package which also saw the state obtaining a 20 percent stake through a capital issuance. Clearly, risk awareness did not translate into risk resilience. What is true for Lufthansa is true for the many thousand companies across the world who struggle to survive.
Many different conclusions will be drawn from the age of Covid 19 the world is currently living through. One lesson is that strategic risk management needs to move from the periphery to the center of awareness of the global community - and all the large and smaller players operating in an environment that allows risk events to proliferate. In the post-Covid-19 era, smart strategic risk management will become an essential component of effective corporate and global governance.
From Global Interdependence to Loose Coupling
We believe that the concept of 'loose coupling' is the most useful point of reference for framing the debate about the shape of the post-Covid-19 global order. A loosely coupled world will oscillate between fragmentation and integration, between governments' desire for self-sufficiency and autonomy, and their desire to generate growth through cooperation. It will be built around the confidence which its different players place into their own risk management capabilities, but also trust in the integrity of their partners.
Global economic interdependence has been the default outcome of the world’s capital, labor, goods, services and technology market integration processes over the past 30 years. It has brought about tremendous economic and social benefits and has formed the environment in which its constituents - governments, companies, investors, civil society - have been operating for the past decades. But global connectivity and interdependence have also created an environment in which global risks have been able to travel geographic and system boundaries with more ease and at greater velocity. Interdependence provided Covid-19 with the 'transmission channels' it needed to spread. Within weeks, SARS-CoV-2 was able to travel around the world creating a pandemic risk event impacting societies, the world economy, national and international politics.
Since the beginning of this year, the world has been muddling through the uncertainty of the Covid 19 outbreak. And only slowly is the global community learning to adapt and address its immediate consequences. But once the pandemic has ceased, in whatever form that might be, we will live in the wake of its transformative significance. The trauma of the pandemic will be profound, and the impulse of 'going local' strong, reinforcing protectionist and nationalist sentiment preceding the crisis. At the same time, it is unrealistic to assume that a de-globalized or disentangled world will necessarily be the consequence, or is indeed desirable. The benefits that global collaboration has brought about in the past decades are simply too significant and to untie global markets and the many other layers of globalization that have brought us together would come at too high a price. Yet the world is not going back to where it was before.
'Loose coupling' and corporate resilience
In between the interdependent global order of the past, and the prospects of a de-globalized one, we believe that balancing the returns generated by global integration with the risks brought about global interdependence will result in an order that is best described as 'loosely coupled'. A loosely coupled world will look more fluid, oscillating between fragmentation and cooperation, between self-sufficiency, autonomy and integration. 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.
The concept of loose coupling was introduced into management sciences by Karl Weick in the 1970s and looked at the conditions that allowed organizations to endure. Lifted into the wider, global debate about what lies beyond the Covid-19 pandemic, it could become a reference point in the reconfiguration of the current system into a more resilient one. As such, the principles of loose coupling might become the central feature of an emerging global order.
Originally used to describe the ordering principles within an organization, loose coupling refers to the informal relationships that its various constituents build beyond its formal design and their contribution to ensuring the survival of the organization at large. While that formal design seeks to 'tightly couple' its constituent parts to promote efficiency gains, their informal, loosely coupled relationships represents the 'glue' holding an organization together. Each part has a keen interest to preserve its own identity and some evidence of physical and logical separateness to ensure its long-term survival. Efficient resource management, the diversification of relationships across the organization, and the acute awareness for sustaining acceptable levels of efficiency in an uncertain environment are key behavioral determinants. Yet to meet joint, organization-wide objectives, units develop ties much less prescribed and constricted than a formal organizational chart would suggest, but rather impermanent, dissolvable and tacit ones.
Lifting 'loose coupling' into the debate about the post-Covid-19 global system
Advocates of 'loose coupling' suggest that organizations with a strong element of loose coupling are more adaptable to change in their operating environment. They benefit from a perceptive sensing mechanism, allow for localized adaptation and can retain a greater number of mutations and novel solutions than would be the case in a tightly coupled system. A breakdown of one part of the organization can be sealed off, preventing it from disrupting others. As such, they are much better at detecting external risks early on, cutting off the transmission channels that allow risks to spread across the organization and more quickly reconfiguring a response to systemic shocks.
Lifted out from management science debates from some fifty years ago into the current discussion about the shape of a future, post-Covid-19 global system, loose coupling suggests that its constituents place much more focus on the preservation of their autonomy and integrity, and in consequence, the scaling back of dependencies on others. The desire for higher levels of resilience in a world that is perceived as uncertain and risky will compete with the desire to maintain high levels of efficiency. In the aftermath of Covid 19, this order will be less geared towards efficiency than a tightly-knit, interdependent one, but more towards building risk awareness and flexibility, appreciating slack and redundancy but also risk diversification as important instruments stabilizing the system at large. Over the long run that system will seek to find a new equilibrium, balancing efficiency and resilience.
All this will not mean that working together on a global scale is coming to an end, as the de-coupling argument would suggest. Global cooperation will continue to unlock value – but under different circumstances and in different constellations. As the parts of an organization do not intend to isolate themselves from their peers, the members of the global community will need to work out the novel conditions under which they are going to work together.
 Karl E. Weick. Educational Organizations as Loosely Coupled Systems. Administrative Science Quarterly, 21: 1, March 1976.