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Cranes and bulk carriers are pictured on the premises of the Odesa Sea Port, Odesa, in southern Ukraine.
28 OCTOBER 2019 - Cranes and bulk carriers are pictured on the premises of the Odesa Sea Port, Odesa, in southern Ukraine. (Photo by Ukrinform / Future Publishing, Getty Images)

Q&A: Why Geopolitical Resilience Matters

Your organization—no matter how small or niche—does not exist in isolation. Geopolitical factors will affect supply chains, partnerships, and customer bases that your company relies on. Secondary and tertiary effects from major political power shifts worldwide can drive migration, resource scarcity, social tensions, and even conflict, affecting your organizational footprint.

Resilience—supported by intelligence, risk monitoring, and in-depth knowledge of your organization’s needs, priorities, and pain points—can enable companies to weather the ramifications of civil unrest, political instability, and geopolitical change. To drill down on this topic, Security Management caught up with Joe Frederick, an independent senior geopolitical risk consultant and a member of the ASIS Extremism and Political Instability Community’s steering committee.

The conversation below has been lightly edited for clarity and length.

Security Management (SM). Why does geopolitical resilience matter to private organizations?

Joe Frederick. Geopolitics has become increasingly critical to many decision-making processes, particularly for organizations with a global footprint. Even if businesses do not have a global presence, the COVID-19 pandemic, trade wars, and the Ukraine–Russia War clearly demonstrated that organizations are no longer insulated from shocks generated by geopolitical events. Instead, private organizations are directly exposed to an array of risks that can negatively impact their operations, assets, profitability, staff well-being, and reputation.

Geopolitical turbulence has undoubtedly had the most enduring impact on the global supply chain. The Ukraine war impacted grain supplies. Prior to the war, Ukraine and Russia accounted for up to 30 percent of global wheat exports, plus significant trade volumes of corn and sunflower oil. During the early stages of the conflict, Ukrainian exports dropped by around 65 percent, hurting countries including Egypt, Lebanon, Somalia, Ethiopia, Sudan, Tunisia, Libya, Algeria, and Yemen, among others. The shortage in supplies significantly raised prices globally, compounded by the higher transport costs. In addition, it pushed more people into—or deeper into—food insecurity.

Trade disputes, accented by sanctions and tariffs, are also creating [an] uncertainty and volatility. The COVID pandemic taught organizations the importance of diversifying supply chains, but this new period of weaponized tariffs is facilitating the shift in the geopolitical order. BRICS (Brazil, Russia, India, China, and South Africa) has been showing more determination to reshape the geopolitical status quo by driving initiatives such as de-dollarization and expanding intra-BRICS trade. If countries reduce their dependence on trading in the U.S. greenback, then this will have significant implications across multiple sectors. The fact that BRICS continues to grow its membership demonstrates that we are heading more towards a multipolar world.

Multipolarity also poses another risk in terms of global governance and norms. Multinational institutions, such as the United Nations (UN), for example, seem to be losing their legitimacy and influence. Governments abrogate from agreements with relative ease, or the power to enforce or uphold accords seems to be eroding these days.

SM. Why should private organizations be monitoring for potential and current hot spots? 

Frederick. Organizations have become familiar with dealing with uncertainty in recent years, which is a good thing. The problem is knowing which hot spots or emerging hot spots will generate the greatest amount of uncertainty. It is safe to say that volatile situations in resource-rich regions or major transit corridors will generate the greatest degree of disruption. U.S.–China frictions have demonstrated the importance of protecting and diversifying the supply chain for rare earth minerals and semiconductors.

In addition to the supply chain, geopolitical turbulence may impact operational continuity and staff safety, particularly in and around conflict zones. Trade wars can influence currency values, commodity prices, and capital markets. New and emerging technologies, especially in artificial intelligence (AI) and machine learning, coupled with trade frictions, have created an unbalanced regulatory and compliance environment, elevating risks to firms.

As uncertainty becomes more accepted in operational terms, firms can change their approach from reacting to crisis to long-term strategy building by continually monitoring for the indicators and warnings of hot spots.


It is safe to say that volatile situations in resource-rich regions or major transit corridors will generate the greatest degree of disruption.


SM. What are some current hot spots that you’re watching?

Frederick. The Sahel has seen a year-on-year growth in instability in recent years, driven by the conflicts in Sudan and South Sudan as well as security vacuums that has allowed for the proliferations of extremist militancy. The al Qaeda-affiliated Jamaat Nasr al-Islam wal Muslimin (JNIM) and its competition with the Islamic State in the Greater Sahara (ISGS) is driving instability in Burkina Faso, Mali, and Niger—and it is expanding. This instability is facilitating illicit trade in narcotics, weapons, and people throughout Africa, Europe, the Americas, and Asia. It is also creating mass migration, particularly into Europe, leading to greater political polarization on that continent.

The conflicts in Israel and Ukraine are increasingly dragging in unwilling participants. With recent Israeli strikes against Qatar, a known safe haven for Hamas, this war continues to escalate regional tensions.

The Ukraine war has actively expanded into Poland with the recent surge in drone incursions into Polish airspace, triggering NATO allies into considering their options on retaliating against Moscow. Drone overflights over Poland are nothing new, but the shooting down of these drones by the Polish military is a marked intensification. NATO allies have triggered Article 4 of NATO, which is a mechanism mandating consultation among member states on potential responses. While the mechanism does not trigger a direct military response, there could be other measures, such as troop deployments and arms support, which could further escalate tensions….

One thing to point out—and this is worth pulling the string on—is the UN. There are certain levers that the UN can use, but its ability to end wars is severely constricted by, for example, the veto powers of the UN Security Council. Given that Russia is a permanent member of the council, the UN’s intervention is fairly limited. If anything, it highlights much-needed reforms at the United Nations.

SM. What makes a geopolitical situation worth additional attention? How do you triage which areas to watch more closely than others? 

Frederick. Great question. There is no all-seeing and all-knowing portal, which means that organizations should have a flexible and holistic approach to geopolitical risk management. It really depends on an organization’s priorities. Firms should map their operational footprint, including the supply chain, against known geopolitical flashpoint areas. If there is no direct impact, then scenario plan to understand what secondary and tertiary impacts could be.

By having a holistic approach to geopolitical risk management, it allows an organization to integrate risk intelligence, operational resilience, and strategic foresight across the enterprise. An organization should direct its risk management resources where its strategic and operational interests intersect with nodes of instability, as well as monitor for the indicators and warning of potential risks.

SM. Do you have any key sources of information to help you analyze potential risks from these areas? 

Frederick. There are a lot of great intelligence and information vendors out there, as well as sources of timely and reliant media. The risk, however, is becoming too reliant on sources of information.

So, I always encourage people to cast the net wide and do your credibility checks. Do not be afraid or too proud to take in media from sources that run counter to your own political beliefs. This can help you understand a potential adversary. It can be useful information to help mitigate against potential threats. It’s also important to know how to filter out the noise and remain open to information that may counter your own biases. Also, keep your rolodex of SMEs current, as best as possible.

 

Claire Meyer is editor-in-chief at Security Management. Connect with her on LinkedIn or email her directly at [email protected].

 

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