The Extra G - ESG²: Geopolitical risk
Principles-based guidance for geopolitical risk oversight and its integration with ESG issues for boards, risk oversight committees and risk functions.
Background
The benign political context in which many businesses globalised their market presence, supply chains and support services has disappeared. Organisations face an increasing variety of challenges from geo-economic competition between states and the emergence of an unstable geopolitical environment which increases the complexity of ESG decisions.
Preparedness
Organisations may lack the experience, capabilities and skills needed to manage geopolitical risk exposures and anticipate the ESG challenges these can create. Agile governance is key to addressing risks which are not easily quantifiable, increasingly non-linear and with wide-ranging first and second order business impacts.
Comprehensive guidance to help companies and their boards address these complex issues has been in short supply.
The Extra G - ESG²
The Extra G - ESG² provides principles-based guidance. The guidance is designed to be used by boards, risk oversight committees, board committee members, heads of risk and risk functions. It is also relevant to senior executives in business units, and other control and assurance functions.
In preparing this guidance, The Risk Coalition has partnered with geopolitical risk management experts, GRI Strategies.
Why use the guidance? Key questions
Specialist understanding and monitoring of geopolitical and geo-economic issues should feature as a central component of corporate strategy or risk management activity. The three key questions to consider are:
What internal capabilities do you need in your organisation to anticipate geopolitical risks and their impacts, and how should these be deployed within an organisation?
How can your company’s board ensure your organisation will remain resilient to potential external shocks?
Who in your organisation should have the leadership and oversight responsibilities in this critical area?
“Geopolitical risks are more frequent… caused by states (wars and other forms of conflict between powers, internal conflicts, regulatory stability, expropriation, corruption, extraterritorial sanctions) or non-state entities (social movements, terrorism, cyberattack). These have important implications for all types of business... and, of course, this affects corporate governance, the composition of boards and the way boards should integrate geostrategic awareness on local and international transformations and trends. ”
Frédéric Visnovsky, Deputy Secretary General, ACPR, Banque de France, July 2019
Access the Guidance
The guidance is separated into Part A for risk oversight committees and Part B for risk functions. Whilst each stands alone, collectively they cover a total of 54 key issues.
To download the full guidance, and receive occasional updates from the Risk Coalition, please complete the following form. By downloading this guidance, you consent to the Risk Coalition sharing your contact details with selected partners and sponsors of the Risk Coalition.
