Appoint a chief geopolitical officer
A CGO is a member of the senior leadership team with single-point accountability for managing the impact of politics on the company's business interests. They work closely with functional experts (particularly government/public affairs teams) and other executive portfolios (particularly Strategy & Risk) to maintain a whole-of- company view.
This is a job for the CEO personally. In times past, having a dedicated government/public affairs team was in itself a sufficient response. Now it is simply the start. Those professionals are highly effective when issues are well defined, lines of engagement with government are clear and open, and government counterparties have capacity. Issues of industry regulation and technical operating standards still largely present this way.
Conduct a geopolitical stress test
Getting a handle on current levels of activity and exposure to geopolitical developments is an important building block, especially if this hasn't been a subject of active thought for the CEOs. One way to do this is to conduct a geopolitical stress test on the strategy and planned initiatives.
For example, virtually every company would be gravely affected by a global outage of transport or communication networks, which is not a far-fetched scenario in a time of heightened geopolitical tension. A stress test could help evaluate the impact of such disruption. A CEO could take their company's 3-year business plan and model the following scenarios (individually or collectively) to get an idea of their exposure and resilience.
Implement a geopolitical forecasting and monitoring solution
For companies to truly feel like they have a handle on geopolitics, they should go beyond relying on mass media for information and invest in specialized geopolitical forecasting and monitoring capabilities. It can be tempting to feel covered on the basis of easy and costless access to news coverage and analysis. However, it is precisely the 24/7 news cycle and the over-abundance of current affairs coverage and commentary that makes it more important to be discerning.
In a noisy world, it can be harder to separate fact from fiction, sentiment from strategy, and decisions from drama. However, there are tools available to help companies navigate this landscape in real time, and support available from specialized teams of political analysts focused on covering politics in real-time and translating those into business implications.
Read the full report: The CEO as Chief Geopolitical Officer (PDF 785 KB).
Evaluating the company-wide impact of geopolitical risk
Area of disruption | Examples |
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Financial model Key fundamentals of the financial model — interest rates, tax rates, tariffs etc. — could face significant change following political or regulatory shifts. |
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Business model The attractiveness and feasibility of aspects of the business model, such as geographical footprint, product attractiveness and customer profile, may also be challenged by geopolitics. |
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Operating model Key components of the operating model — core processes, technology and operations infrastructure etc. - could be significantly destabilized by a geopolitical event. |
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Sophie Heading
Global Geopolitics Lead, Global Clients and Markets
KPMG International
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