How companies can forecast future economy to find opportunities and growth
There are a number of ways that businesses can forecast future geopolitical risks. This includes using data analytics as well as monitoring news about the hotspot and its security and economic impacts around the world.
Some companies are also starting to use artificial intelligence (AI) to help identify threats and opportunities. Artificial Intelligence can help to assess a wide range of factors, including political instability, economic trends and social media sentiments but it should not to be relied on possible flaws and lack of real-time information.
By studying and understanding the risks associated with geopolitics, businesses can be better prepared to deal with them. This can help to protect growth and ensure that companies are able to take advantage of opportunities as they arise.
It is important to use historical data and current data to perform analysis of the geopolitical threat emanating from a region that may have a direct or indirect impact to your organisation. Anticipate supply chain disruptions which may lead to the unavailability or shortage of specific business resources. The economic knock on effect causing inflation will bring concerns to employees so be aware of the psychological wellbeing of your workforce.
Two main variants of geopolitical risk
- Country risk. According to the Organisation for Economic Co-operation and Development “country risk encompasses transfer and convertibility risk (i.e. the risk a government imposes capital or exchange controls that prevent an entity from converting local currency into foreign currency and/or transferring funds to creditors located outside the country) and cases of force majeure (e.g. war, expropriation, revolution, civil disturbance, floods, earthquakes)“.
- Event risk quantifies the likelihood and potential impact of geopolitical events, such as coups, terrorist attacks, and natural disasters.
These risks can have a significant impact on businesses and their growth. It is important for companies to understand these risks and how they can affect their business. By understanding these risks, companies can be better prepared to deal with them if they do occur.
Geopolitical risk is an important consideration for businesses when planning for growth. By understanding the risks, companies can be better prepared to deal with them if they do occur. This can help to protect growth and ensure that companies are able to take advantage of opportunities as they arise.
Please contact me directly or any of my team using the contact options to have set up a meeting to find out ho we can help you manage the challenges of geopolitical risk.
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