10 April 2024
When considering the volatility and uncertainty in the risk environment, boards and senior leadership teams are expected to have considered emerging trends, and whether operational resilience arrangements suitably protect an organisation’s trading position and reputation.
Drawing insights from our Annual Malicious Risk Report 2024, we offer some actionable agenda items for senior leaders to consider to better anticipate, prepare for, and respond to malicious events, in what is now often a complex and ambiguous global risk landscape.
Geoeconomic measures and their impact
Whether it’s export controls or investment screening procedures, geoeconomic measures can have a direct strategic impact on an organisation’s ability to conduct business. And as we’ve seen frequently in recent years, indirect impacts to supply chains can also cause significant disruption to business operations. Organisations must evaluate the potential likelihood and repercussions of such measures and have coherent plans to mitigate risks.
For instance, restrictions on technology exports may hinder innovation and collaboration in an increasingly broad list of sectors considered ‘strategic’, or with a National Security nexus. The recent trade disputes between the United States and China underscore the importance of anticipating this issue, which is likely to become more prevalent.
Implications of resource nationalism and export bans
As the global economy transitions towards renewable energy sources, the demand for rare-earth minerals, crucial components in renewable energy technologies, continues to rise. However, the control over these reserves often leads to heightened geopolitical tensions and instances of resource nationalism. For instance, recent examples include countries like Chile and Bolivia nationalising their lithium reserves, crucial for electric vehicle batteries.
Additionally, countries like Zimbabwe and Indonesia imposing export bans on certain minerals further underscore the complexities of navigating political and regulatory risks associated with natural resource extraction and trade. Organisations must proactively manage these risks to ensure operational continuity and resilience.
Expansion of the technology sector considered important to national security
The entwining of technology and national security presents significant implications for data transfer, executive travel, and workforce localisation. Organisations are required to deftly navigate regulatory requirements and geopolitical sensitivities, while maintaining operational agility. The growing emphasis on cybersecurity and supply chain resilience, especially within critical sectors like defence, advanced technology, and healthcare, underscores the importance for organisations to invest in ‘getting this right’.
Conclusion
As stewards of governance and strategy, boards and senior leadership teams are now expected to guide their organisations through an increasingly challenging risk environment. Inevitably, this requires high quality discussions to ensure leaders are informed, adaptive and well prepared. By addressing the key considerations outlined in our Annual Malicious Risk Report 2024, leaders can ensure resilience, and capitalise on emerging opportunities.