Geopolitical risk spikes leaving business leaders fearing the consequences of war and inflation.
Economic turmoil, war in Ukraine and the continuing impact of a global pandemic … Business leaders haven’t faced such a unique set of challenges in a generation.
Building on a programme of research with business leaders from companies of all sizes from 10 different industry sectors in the US and UK, we throw a spotlight on business risk and resilience – past, present and future.
There could be a geographical element, the US is further away from the current theatre of war, but these perceptions can change dramatically and quite quickly and it will be interesting to see if that has changed when we do the survey again, post what now starts to potentially feel like a US ‘hot’ rather than a ‘cold’ war with Russia.
Roddy Barnett
Head of Political Risks & Trade Credit
If I was a risk manager in the US, the things I would be concerned about are the threats from deadly weapons events and strikes, riot, and civil commotion. All the statistics that we see show that there have been more and more mass shootings over the last four years; we thought the figures couldn’t get any worse and as recent events in Texas and Buffalo show every single year it does. It is vital that risk managers are not complacent about the risk, but actively prepare to help prevent and mitigate the impact of these horrendous incidents.
Chris Parker
Head of Terrorism and K&R, Beazley
Chart scales are based on the percentage of companies ranking a risk as their leading concern and on the percentage of companies feeling ‘very prepared’ to anticipate and respond to each risk, standardised across the four risk categories: geopolitical, digital, environmental and business.
Sector impacts diverge as resilience falls away
In terms of sector impact, it is notable that financial institutions and the hospitality sector are feeling the least resilient to the risk of economic uncertainty as spending power and investor confidence fall away. With public policy and trade relationships in turmoil, it is perhaps little surprise that energy & utility companies are particularly troubled by the prospect of political risk during 2022.
With public policy and trade relationships in turmoil, it is perhaps little surprise that energy & utility companies are particularly troubled by the prospect of political risk during 2022.
Beazley’s latest Risk & Resilience research into geopolitical risk, published today, shows that events so far this year have significantly altered business leaders’ perceptions of the risks the
Beazley undertook its annual survey of business leaders’ attitudes to risk and resilience in January, before the Russian invasion of Ukraine. At that point, only 25% of those surveyed felt they were operating in a high-risk environment. However, asked to project forward six months almost half (43%) of UK leaders and over a third (38%) of US leaders anticipate that they will be operating in a high-risk world by the middle of the year.
If businesses take only one lesson from the war in Ukraine it will surely be the complete lack of predictability when it comes to geopolitics and the need to build in resilience against future political upheavals.
The war in Ukraine has rapidly disrupted global trade in key commodities like grain, oil and gas, ,exacerbating an existing background of energy shortages and rising costs. It is therefore not surprising that our latest Risk and Resilience survey shows inflation, in particular, is one of the key factors worrying business leaders, nor that they expect economic uncertainty to remain high through to the end of this year.
The world was a turbulent place before COVID-19, and a fearful one before Russia’s invasion of Ukraine. But while repeated lockdowns subdued some of the civil unrest that simmered in the early days of the pandemic, and the war has focused minds on geopolitical risks, many of the issues that sparked social upheaval pre-COVID still remain.