Articles

Geopolitical Instability

84% of executives now believe geopolitical instability will have an important or very important impact on global business.

 

More executives than ever before are convinced that geopolitical and macroeconomic instability will affect global business and their own companies in coming years, according to the latest McKinsey survey on globalization. The number has doubled since 2014 - the largest increase for a given trend since McKinsey began surveying executives on this topic a decade ago.

 

An uncertain world

The results suggest a fundamental shift in the way executives and their companies view globalization. Over the next five years, nearly all respondents expect a disruption in the global economy due to volatility. 43% of respondents also feel that these potential disruptions to the economy will be very severe.

 

Staying one step ahead of the risks

While geopolitical risks are complex issues and may be outside the comfort zone of many executives, they are not fundamentally unknowable or unmanageable business challenges. They could even be a potential source of competitive advantage for companies that develop the skills to manage these risks effectively.

To stay ahead of geopolitical uncertainty, executives can take the following measures:

 

  • identify trends and disruptions that are specific to their organizations and markets,
  • assess the potential market impact of these risks,
  • develop initiatives to mitigate risks or capture opportunities,
  • integrate geopolitical analysis into regular decision-making and planning processes,
  • monitor new developments and reassess strategic initiatives.

 

Source : http://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/geostrategic-risks-on-the-rise