In an era of unprecedented geopolitical turmoil, global organisations face a multitude of challenges that can significantly impact their operations and bottom lines. The ongoing Ukraine war, soaring prices, and conflicts in the Middle East are just a few of the factors that have sent recent shockwaves through the global business landscape. PwC’s Global Business Services (GBS) advisory delves into the world of managing risks from the perspective of a GBS center and explores how these essential hubs of operational excellence can help organisations navigate the treacherous waters of geopolitical uncertainty.
1. Identifying geopolitical turmoil and anticipating business risks
The world has witnessed a series of geopolitical events that have reverberated throughout the business realm. The protracted Ukraine conflict serves as a vivid illustration of how political volatility can disrupt international trade, supply chains, and investments. Meanwhile, rising prices, driven by factors ranging from supply chain disruptions to inflation, have pressured businesses to adapt rapidly. In addition, persistent regional conflicts, like the Israel-Palestine dispute, underscore the intricate challenges global organisations face.
GBS centers, equipped with global perspectives and real-time data access, are uniquely positioned to aid companies in grasping the nuances of these geopolitical risks. They offer valuable insights into how procurement lifecycle and supply chain processes can be aligned together to impact specific markets, industries, and supplier networks. By staying informed and proactive, organisations can better anticipate potential changes needed to minimise risks.
2. Diversification and Resilience
As geopolitical turmoil continues to be a major driver of uncertainty, diversification has emerged as a critical strategy for risk mitigation. Diversifying business operations, supply chains, and investments across different regions and markets can act as a shield against localised geopolitical instability. For example, businesses that have diversified suppliers in multiple countries are less vulnerable to disruptions caused by conflicts or trade restrictions in a single region.
"Efficient GBS centers can contribute to reducing the organisation’s exposure to geopolitical risks and enhancing overall resilience."
GBS centers provide crucial support in facilitating diversification efforts. Having a distributed operating model with the GBS centers, companies can keep business continuity while ensuring compliance with regulations. GBSs also need to re-evaluate the political and economic stability and thereby reduce overreliance on specific hubs or markets and distribute the risk by ensuring cross GBS continuity risk mitigation. Efficient GBS centers can contribute to reducing the organisation’s exposure to geopolitical risks and enhancing overall resilience.
3. Proactive Risk Assessment and Scenario Planning
Proactive risk management in the face of geopolitical turmoil is paramount. Businesses must conduct comprehensive risk assessments and scenario planning exercises to anticipate potential disruptions and develop mitigation strategies. These "what if" scenarios allow organisations to identify vulnerabilities, prepare for contingencies, and ensure business continuity.
GBS centers offer a wealth of expertise in risk management and access to advanced analytics tools that can model various scenarios and their potential impact. Collaborating with GBS centers empowers companies to craft robust contingency plans that encompass everything from alternative sourcing strategies to financial hedging techniques. By doing so, organisations can proactively reduce the uncertainty posed by geopolitical turmoil and prepare for a range of possible outcomes.
4. Leveraging Technology and Data-Driven Insights
In an age where data reigns supreme, technology and data-driven insights are invaluable assets in managing geopolitical risks. GBS centers have the capacity to harness big data, machine learning, and artificial intelligence to monitor geopolitical developments in real time. By analysing news, social media, and other information sources, they can provide organisations with early warning indicators, enabling businesses to respond swiftly to emerging threats.
Technology can streamline compliance efforts, helping companies navigate the intricate web of international regulations and sanctions. As geopolitical tensions ebb and flow, GBS can help staying compliant with evolving rules is paramount to avoid legal and reputational risks. GBS centers have capability to setup analytics hubs that can serve the business by modelling price changes, sales forecasting and creating business reports that can help in re-planning during disruptions.
5. Inter and Intra-company Collaboration
In the face of geopolitical turmoil, collaboration with industry peers, governmental agencies, and non-governmental organisations can be a powerful risk management strategy. GBS centers are well-placed to facilitate these collaborations by connecting businesses with relevant stakeholders and fostering open dialogues.
GBS can advocate discussions with regulatory bodies and policymakers to ensure that business interests are taken into account when shaping international policies. GBS communities (peers organised by advisors in PwC) participate in discussing the geopolitical agendas risks and how each organisation is mitigating them, can influence outcomes that other GBS centers can take to make more favorable their operations and address such disruptions.
In conclusion, managing risks in a world of geopolitical turmoil is an ongoing challenge for global businesses. The Ukraine war, rising prices, and conflicts in Israel are just a few examples of the complex geopolitical landscape organisations must navigate. GBS centers play a crucial role in helping companies understand, prepare for, and respond to these challenges.
