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KSG Exec Brief: Taiwan Crisis Scenario Planning
Can you reach the levers you might need to pull?
Table top exercises for crisis scenarios allow executives to both learn about a potential crisis and to identify the levers they will want to pull during that crisis. For companies operating in the PRC and East Asia, going through the exercise of a Taiwan crisis can help decision-makers identify the capabilities to start building now while hoping they never have to use them.
The Financial Times recently published an analysis of financial losses of firms that chose to leave Russia after its invasion of Ukraine. Businesses able to cut and run quickly lost the least amount of money, with those staying behind losing the most and have their assets expropriated by the government. While many firms may have elected to remain in Russia due to the complexity of leaving (e.g., disposing of significant in-country CapEx), it's clear that slow exits reflected a lack of preparation.
Another source of lessons from the Russian withdrawal was the establishment of legal impediments preventing citizens from supporting the exit of their foreign employer. Routine divestiture actions, such as network separation, became a crime; putting foreign employers in an ethical and legal quandary. Taking action to help separate networks became a crime, and employers could not ethically ask their employees to take actions that put them in legal jeopardy. Business executives scrambled to partition networks and decommission accounts quickly. Most found that a quick exit was impossible for their enterprise network, much less physical assets in Russia.
Table Top Exercises
It’s not a vote for war to run a table top exercise. As KSG published last week, there’s little consensus that the PRC will invade Taiwan. Yet running an exercise and developing the tools to safely and quickly relocate operations in East Asia can influence already on-going enterprise architecture work prompted by recent data security laws in China. Compliance with PRC laws and regulations can be the motivating factor to implement changes developed from any table top exercise, providing political cover for executives.
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