With numerous and various geopolitical risks around the world, businesses must act now and plan to be strategically positioned to successfully navigate an evolving business environment.
Washington – The Association of Corporate Counsel (ACC), a global legal association representing more than 48,000 members in 117 countries, published a new report, “Navigating Geopolitical Risk: A Brief Guide.” Based on a survey of 200 law department leaders from US-based organizations, the report highlights how companies are responding to geopolitical risk, which countries respondents identified as posing the greatest geopolitical risk, what key topics are driving those concerns, and high-level tactics businesses can employ to develop resiliency and agility in this continually changing landscape.
The survey was conducted in cooperation with Meg Rithmire, James E. Robinson Professor of Business, Government, and the International Economy, Harvard Business School, and the U.S. Chamber of Commerce Foundation.
Survey respondents identified 72 countries that posed the greatest geopolitical risk to their companies over the next five years, with the top eight being: China, Russia, Mexico and the United States (tied), Israel, Ukraine, India, and Taiwan.
Additional key findings include:
- Specific company activities respondents were most concerned about in high-risk countries were protecting intellectual property, protecting sensitive data, competing in global markets, and protecting employees (Slide 12 of report).
- “Threats to company networks, data facilities, or personnel” and “military or diplomatic crisis involving the country” were two areas of concern that ranked high across the majority of high-risk countries (Slide 11 of report).
- A majority of companies said they would increase or maintain their level of engagements with high-risk countries, with Russia being a notable exception. There, 18% of respondents said they would decrease engagements, with 53% saying they would stop engagements. This is in stark contrast to China, where 29% said they would decrease engagements and only 10% said they would stop engagements (Slide 17 of report).
- Companies implemented a wide range of actions in response to geopolitical risk (Slide 18 of report), including initiated a new due diligence process (49%), initiated new education/training processes related to risk (45%), initiated scenario planning related to risks (43%), and invited external consultants to provide information (41%).
“In-house counsel are continually scanning the horizon for threats to their business, and it’s clear that geopolitical risk around the world is a significant and rising source of concern,” said Veta T. Richardson, ACC president & CEO. “A greater number of powerful actors are shaping an increasingly complex global system. This is further complicated by the fact that the world is more interconnected than ever, as regional wars, infectious diseases, regulations, supply chains, sanctions, and climate change from carbon emissions are just some of the issues impacting businesses globally. ACC is proud to contribute the in-house perspective to the important work being done by Prof. Meg Rithmire at Harvard Business School and the U.S. Chamber of Commerce Foundation to help businesses successfully cope with changing and long-term geopolitical risks.”
“It is important to have the views of legal officers to understand how firms are navigating the new and considerably complex geopolitical landscape,” said Meg Rithmire, James E. Robinson Professor of Business, Government, and the International Economy, Harvard Business School. “Legal officers have a ‘whole-of-firm” view, and they are now leading their companies not only in novel compliance requirements but forward-looking processes for protecting company assets and reputations. It is especially interesting to learn how many companies have initiated new processes for managing geopolitical risks. We are learning that geopolitics is reshaping transnational commerce, for sure, but also company governance.”
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About ACC: The Association of Corporate Counsel (ACC) is the premier global legal association that promotes the common professional and business interests of in-house counsel who work for corporations, associations and other organizations through information, education, networking, and advocacy. For more than 40 years, ACC has set the standard for in-house counsel and raised awareness regarding the value of the chief legal officer in the C-suite and boardroom. With more than 48,000 members employed by over 12,000 organizations and spanning 117 nations, ACC connects its members to the people and resources necessary for both personal and professional growth. By in-house counsel, for in-house counsel® remains the foundation for ACC’s market leadership. For more information, visit https://www.acc.com/and follow ACC on LinkedIn, Twitter, and Facebook.