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KSG Exec Brief: Fool me once...
First with Russia, and now in the Middle East, multinational firms are fundamentally shifting their mindset and security posture for a world of increasing geopolitical risk.
Key geopolitical flashpoints are forming an arc of instability around the Eurasian periphery. While the conflicts and tensions in each potential crisis zone are nominally independent of each other, they are increasingly linked to a global dynamic driven by an alignment of authoritarians (in China, Russia, Iran, and North Korea) with ambitions to challenge the US-led international order.
Since Russia’s invasion of Ukraine in February 2022, geopolitical risk has increasingly preoccupied multinational executives and boards. As events in the Middle East straddle the knife’s edge of regional conflict, it is critical that leaders step back and consider this pattern of crises in a wider global context.
The global risk environment is driven by the strategic ambitions of an alignment (some say Axis) of autocrats running China, Russia, Iran, and North Korea (CRINK). These countries create zones of potential conflict spanning the entire Eurasian periphery, from the Artic Circle, North and Baltic Seas, through Eastern Europe, the Balkans, the Middle East, the India-Pak-China border, the South China Sea, Taiwan, and the Korean Peninsula. We highlight key specific flashpoints in these areas below.
Some of these are in a low simmer, some are heating up, and others are at full boil. Each are also increasingly linked and interdependent — witness North Korea-Russia strategic arms agreements, Russian and Chinese support to Iran and its proxies, Iran’s support for Russian aggression in Ukraine, and India’s balancing of its strategic imperatives at its border with China and its contribution to counter-China deterrence over Taiwan, while remaining vigilant of Pakistan’s actions nearby. Just this week, a Chinese ship rammed a Philippines naval vessel on its way to resupply its military outpost on a shoal in the South China Sea. Washington is now concerned that a mutual defense treaty could be used to ask the US to help deliver supplies to the island, as it did in 2014. Sparks could fly in the coming weeks.
While each of these principal US-adversaries conducts individual operations out of their narrow strategic interests, KSG expects an increasing convergence of military and intelligence collaboration, diplomatic initiatives, technology and arms transfers, and economic warfare activities designed to amplify malign effects on the West and shore up each countries’ relative weaknesses.
The coupled nature of these flashpoints creates an environment where spillover risks are heightened—individual, local conflicts can quickly pull in great powers and spark catastrophic confrontations. Short of outright war, these dynamics increase the baseline level of geopolitical risk, introduce more uncertainty and cost into business operations and supply chains, and consume executive and organizational bandwidth.
What Executives and Boards Should Do
To best navigate this uncertain, but likely sustained, period of elevated geopolitical risk C-Suites and boards should:
Examine, test, and refine crisis management plans and processes, with a focus on enterprise-wide operational coordination, situational awareness, and strategic decision-making — these should include all key functions spanning executive leadership, legal, finance, IT/cyber, comms/PR, HR, supply chain, product/sales, physical security, government affairs and business continuity/disaster recovery.
Evaluate the adequacy of sources of geopolitical and cyber risk intelligence (both informal/CEO-rolodex and formal advisory services) and internal sensemaking processes to inform strategic decision-making in a crisis environment.
Ensure security teams and tooling are adequate to protect and defend corporate networks and data against geopolitically motivated cyberattacks or compromises.
Consider first, second, and third-order impacts from potential operational disruptions on supply chains, network reliability/integrity, revenue projections, key partners, critical customers, and staff — identify and prioritize at-risk assets and suppliers for resilience and/or redundancy.
For more information or assistance on these issues, please reach out to email@example.com.
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