The new world of political risk

Political Risk: How Businesses and Organizations Can Anticipate Global Insecurity by Condoleezza Rice and Amy B. Zegart (published by Hatchette Book Group 2018) is a must read book for businessmen, political leaders, and any person interested in understanding the new world of geopolitics, rise of populist leaders and the consequences of political actions on the world economy and everyday lives of people. 

According to the book’s authors: “Twenty-first century political risk is the probability that a political action could significantly affect a company’s business... Political risk was once just about the actions of governments such as dictators seizing assets or legislators regulating industries. Today governments are still the main arbiters of the business environment, but they are no longer the only important ones. Instead, anyone armed with a cell phone or a Twitter or Facebook account can create political risks, galvanizing actions by other citizens, consumers, organized groups and political officials.” 

Political actions as a risk to businessmen is now becoming common as we witness a rising tide of global populism. Trump has publicly attacked AMAZON, one of the world’s largest corporation. The US Postal Office is being pressured to increase its rates for deliveries by AMAZON. All these actions are reportedly caused by Trump’s displeasure with Jeff Bezos, owner of AMAZON and the Washington Post, a publication highly critical of the Trump administration.

The publisher wrote: “POLITICAL RISK investigates and analyzes this evolving landscape, what businesses can do to navigate it, and what all of us can learn about how to better understand and grapple with these rapidly changing global political dynamics. Drawing on lessons from the successes and failures of companies across multiple industries as well as examples from aircraft carrier operations, NASA missions and other unusual places POLITICAL RISK offers a first-of-its kind framework that can be deployed in any organization, from start ups to Fortune 500 companies.”

One of my favorite management guru is Jim Collins, author of Good to Great and co-author of several seminal books in business like Beyond Entrepreneurship, Great by Choice, and Built to Last. This is what he wrote about the book:

“Rice and Zegart’s POLITICAL RISK should be read by every business leader. Any company that fails to learn and apply the lessons of this wise and practical book can quickly find itself in rapid decline. But equally, those who become skilled at its application can do more than merely mitigate such risks, they can thrive upon them. Well-written and chock-full of compelling case stories wrapped inside a coherent conceptual framework, POLITICAL RISK gets and keeps your attention, page after page. We cannot predict the future, but – with the help of this marvellous masterwork- we can prepare for it.”

The reason the two authors decided to write the book is a compelling story. Condoleezza Rice is a Professor in Global Business and the Economy at the Stanford Graduate School of Business and Senior Fellow on Global Policy at the Hoover Institution. Amy Zegart is co-director of the Center for International Security and Cooperation, Senior Fellow at the Hoover Institution and Senior Fellow at the Institute for International Studies at Stanford University. She was formerly management consultant at McKinsey & Company.

In 2012, the two authors decided to create a new intensive MBA class examining what global risks are, how they are changing and how businesses can best navigate them. They said: “For both of us, the chance to teach together and explain the intersection of global business and politics...was exciting. When we looked for readings to assign, however, we found slim pickings. A search of Harvard Business School’s publishing website received nearly 20 times more materials on global business impact (such as building an effective team or developing an e-commerce strategy) than on the political dynamics that create global business challenges and opportunities in the first place. So we began reading broadly and developing our own framework, cases and simulations.”

Over the past 30 years or so, major geopolitical shifts have brought business and politics together. Some of these shifts discussed in the book including the rise of China, the emergence of new markets at rates that nobody could have imagined, growth of opportunities in “third world” countries, and “...in Silicon Valley technology start ups are moving into foreign markets at warp speed.”

Marc Andreessen, cofounder and partner of one of the world’s most successful venture capital funds told the authors: “In the old days, it just would have taken companies a long time to get fully global, so the thinking and planning would have corresponded to the expansion. In the new world, the expansion happens first whether you want to or not.. And so kind of by definition, the thinking and planning are lagging... Internet companies might end up with 180 countries before they have 180 employees.”

Filipino companies, like Jollibee, SM, Ayala Land, Del Monte, Petron, and EDC (the Lopez geothermal company) have also begun to expand abroad.

After several chapter explaining the development of major geopolitical shifts, there are several excellent chapters that would be extremely beneficial to all decision-makers, strategists and anyone seeking to make sense of the current state of world affairs. These chapters include topics like Why Good Political Risk Management Is So Hard, Political Risk Framework, Understanding Political Risks, Analyzing Risks Like A Physicist, Ways To Mitigate Risk, Responding to Crisis, and Strengthening Your Political Risk Muscle.

Risk cannot be just wished away. The future will never resemble the past. Change is happening at an accelerating speed. Organizations must understand the new definition of political risk and retool their political risk management so that they will be “...surprised less often and recover faster.” 

Creative writing classes for kids/teens & adults

Young Writers’ Hangout on June 2, July 7 & 21 (1:30 pm-3 pm; stand-alone sessions). Online Writing for Adults with Tarie Sabido on June 30 (1:30 pm-4:30 pm). All classes at Fully Booked BGC. For details and registration contact 0945-2273216 or [email protected].

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