Insights for What’s Ahead

• Geopolitical risk management is a critical new competency required of US and European MNCs active in the China market. Investors, Boards, and/or other important corporate stakeholders will soon demand it, if they don’t already.
• A key planning challenge is that geopolitical risks tend to emanate from unexpected and unlikely events, so-called “Gray Swans”, that can trigger policy changes, regulatory actions, public opinion shifts and other impacts – including militarization – that can be business stopping, either short- or long-term. Many aspects of the plan challenge are complex, i.e., beyond complicated and involving many “known unknowns”. 
• It is nevertheless possible and necessary for a Company to identify and prioritize the universe of plausible Gray Swans relevant to their business. Structured brainstorming with the right colleagues, along with selected external inputs, can yield a workable longlist from which to start the planning process.
• A cross functional Working Group of people from an organization can assess and refine the longlist to prioritize and categorize the Gray Swans most relevant to the Company, envision and dimension potential impacts, define contingency planning requirements, and outline response measures, including preemptive actions that might prevent certain Gray Swans from happening or dampen their prospective impacts.
• High priority Gray Swan categories must be actively monitored on a continual basis, and the contingency plans to address them updated promptly if required. The ownership of and requirements for this important task must be clearly established.
• Detailed game planning to ensure fast and effective cross-functional, cross-border response is a critical success factor. Communication chains and accountabilities must be crystal clear. Game plans should be regularly rehearsed, refined, and optimized.
• The Government Affairs function should be deeply involved in the required planning and response activity sets, and must be adequately resourced and empowered to do so.