How to Manage Global Risks

At this moment we are facing some big challenges which influence our political, social and economical landscape and it seems our leaders don’t have a clue how to manage them. Politicians are running from hype to hype solving problems and are most of the time focusing on short term damage control. It’s busy in the situation room with lot’s of issues to handle and it sometimes seems there is no strategy room setting direction.

What is Obama’s IS strategy? What’s the EU’s strategy regarding the Greecs debt crisis? What’s Poutin real ambition regarding Eastern Europe? What is China’s geopolitical strategy? It could be our politicians have a strategy for the  problems we are facing, the problem is we don’t know what it is. Probably domain experts and stategist are working behind closed doors on scenario’s and strategies based on which politicians can make decisions but we don’t know how they do this and whom are involved and what the outcome is. Having worked for big companies I know they develop scenario’s to test their business plans, analyse risks regarding potential problems which could occur in the future influencing their business and manage these by mitigation plans. Nato Strategy DevelopmentAre our world leaders doing the same? They probably also work with scenario’s like the NATO does as shown in the picture above including a strategic vision, risk analysis and impact analysis of dependencies between conflicts. But how does this influence decision making and negotiations? Of course this strategy development can not be done public, when your opponents know what your strategy is this will influence the outcome of the negotiation process or conflict so there are good reasons not to do this in the public domain.

Because most of the time we are focusing on one problem at the time would it not be a good idea to have a view on the big picture?  What are our big problems we need to focus on, what’s their risk and impact? And what’s are the dependencies between them? Is it possible to have an high level overview? And track progress on a quarterly basis?

I looked around for this on the Internet and the best report I could find was the 2015 Global Risk overview from the World Economic Forum  which defines a global risk as ‘an uncertain event or condition that, if it occurs, can cause significant negative impact for several countries or industries within the next 10 years’.

World Economic Forum Global Risks 2015

Nice overview but is it realistic to predict less interstate conflicts in 10 years while Russia and China are challenging the US leadership? And will there be less cyperattacks and fraud while the internet is expanding and some countries just started with using the internet and new IT technology is still being developed? Overall It looks like the WEF is more optimistic regarding geopolitical and economic risks than social risk, no good news for the avarage citizen…

I’m more interested on what happenig right now that’s why I made my own Global RIsk Index Report on the most important issues happening right now:

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In the overview above I identified the three main risks which dominate the political agenda at this moment and broke these down into potential scenario’s, their probability of occuring and the geopolitical, social and economic impact, as a result of this I calculted a risk index. Next to this I identified the main dependencies between the three highest risks. This is a first draft but the good thing about it is that it makes risks visible from a broader perspective and sets direction for an overall strategy.

Let’s zoom in at the Greece risks regarding the debt crisis. This risk is now mainly managed as a financial and secondly a social problem. It’s owned bij the Greece, the IFM, Worldbank and EU whereby the EU Ministers of Finance are managing this problem mainly from a fiancial perpective while the Greece government is also concerned for their citizens welfare. As we all know these are difficult negotiations with focus on making short term decisions and only one alternative on the table: Greece leaving the Eurozone. When Greece decides to exit there will be a lot of uncertainty about the impact. This problem is bigger than only financial and social. Greece also has a rising number of refugees from the ME and Africa, a lot of them on the run for ISIS and other radical groups in the ME and Africa. And there is also Russia who is eager to open a new gateway to the Mediterranean for the transportation of oil and gas and militairy reasons. For this reason it’s not strange both NATO and Russia are now building up militairy tensions in Eastern Europe at the same time as the negotiations in Brussel on the Greece debt take place. And don’t forget NATO partner Turkey close by which economy is booming and unsolved territory issues still open. All this does not help to solve the Greece debt crisis and a Greexit can cause a chain of reactions of which we don’t know what the impact will be. The longer it takes to negotiate on a deal with Greece, the more difficult, painfull and expensive it will be to solve this problem.greek-debt-cartoonAll parties involved in the current negotiations with Greece will be aware of this and have there own strategy towards the negotiations which makes this process very complicated. And some important influencers are not part of the negotiations while the outcome of this is also very important for their future. In a case like this the best option would be to broaden the scope of negotiations but with Russia on the sideline not invited to last G7 this will be very difficult. Someone should take leadership in this process and make a first step towards a real solution but I’m not very positive this will happen on the short term.

One thing is sure, It’s not an easy task to manage the world!

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