Module IV·Article IV·~1 min read
Geopolitical Risk in Strategic Planning
Strategy under Uncertainty
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The Return of Geopolitics to Business
After a relatively stable world order in the 1990s–2010s, geopolitics has returned to the agenda of strategists: sanctions, trade wars, supply chain conflicts, technological decoupling (techno-decoupling).
Typology of Geopolitical Risks
Political risk: change of power, change in policy, nationalization. Political risk is especially significant for investments in developing countries and autocracies.
Sanctions risk: restrictions on trade, investments, financial operations. Since 2022, sanctions have become the most significant operational risk for many Russian companies and companies working with Russia.
Supply chain risk: dependence on a single region (China — 70% of supplies of critical minerals for batteries). COVID-19 and events of 2022 launched a global wave of “nearshoring” and “friend-shoring.”
Technological decoupling: the US banned the supply of advanced chips to China; Huawei is cut off from Android. For technology companies — necessity of strategic choice of camp.
Managing Geopolitical Risk
Diversification — of markets, suppliers, production sites. Reduces risk concentration, but increases costs.
Scenario planning — for each scenario: how does business change? What do we do?
Political monitoring — tracking signals of deterioration of the environment in key jurisdictions.
Structural protection — separation of assets in different jurisdictions; avoiding single points of failure.
Practical Assignment
A major Russian exporter of mineral fertilizers (50% of revenue — Europe, 30% — Asia, 20% — Latin America) has received signals about possible EU sanctions. Develop a 3-scenario plan: (1) sanctions not introduced, (2) partial sanctions, (3) full ban. For each scenario — strategic priorities.
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