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The impact of technology on geopolitical risk

Technology is radically changing the nature of terrorism and state-to-state rivalry, making geopolitics one of the biggest concerns facing today’s businesses. John Ludlow, CEO of Airmic, discusses how boards that take a multidisciplinary approach to navigating this complex global picture will be best prepared

Managing geopolitical risks was once just about anticipating and preparing for physical disruption in volatile regions of the world and understanding how this may impact the business environment. Not an easy task by any means, but one in which risks were visible, easy to define and played out on a global stage.

Not so any more. Geopolitics has moved into a new era, one that is more complex, harder to define and that is dangerously dominated by cyber. It operates on many levels, from macro-​economics to state terrorism, the dark web, control of the internet and state competition for technological dominance. And above all it is hugely unpredictable.

This is one of the reasons why a recent survey of Airmic members – professionals responsible for managing risk in their organisations – identified geopolitical tensions as the megatrend that will become the hardest to manage over the next three years. In short, geopolitics is getting uncomfortable. The stability of the past half a century, created by the US-​Russian bi-​polar relations and a pro-​business environment, has been replaced with uncertainty.

Cyber power becomes power

At a state-​to-​state level, geopolitics is increasingly being played out via an undefined technology race as states become aware that technology will give them a strategic advantage in the twenty first century. States are no longer seeking just military advancement, but trade and cyber security advantage. China’s huge investments in artificial intelligence (AI) is a case in point. The global powers believe that if you can get ahead in the technology race now, you’ll stay ahead for a very long time.

One area this is playing out is the control of the internet – including content, rules of conduct and security. As cyber stretches into all areas of state competition, including advanced weapons, the risks to a state of being “switched off” is a big threat. As James Arroyo, director of the Ditchley Foundation, told Airmic members at a recent seminar, cyber power is in danger of becoming the dominant source of state power.

Until recent years, the private sector has dominated the direction and control of the internet, with governments by and large observing from a distance. However, it is now clear that states with different – and sometimes conflicting – motives, want to shape the internet and technology to their advantage and governments are no longer leaving cyber as a neutral ground.

The controversy about the development of 5G infrastructure by Chinese corporation Huawei is a case in point. As AI and the Internet of Things become ubiquitous, the 5G infrastructure that will support it will penetrate all areas of life at an individual and state level. Countries such as the UK, Canada, the US and New Zealand currently disagree on the extent to which potential Chinese involvement in a key 5G supplier could pose a security and data risk to other countries. What is clear, however, is that US businesses and US allies, will feel increasing pressure not to use Chinese technology. What is also clear is that the “technology cold war” is only in its infancy.

The internet: magnifying terrorism

Cyber is also playing a growing role in global terrorism. The internet has become a cheap and widely-​available tool for magnifying terrorism. Social media in particular enables terrorist organisations to spread ideals and recruit far more quickly than in the past – a tactic employed with great effect by Isis in particular. Indeed, it is not confined to Islamic terrorism: the tragic attack on the New Zealand mosque in March, for example, was filmed live on a Go Pro via the internet, and will provide terrible inspiration for future terrorists operating on the dark web.

Meanwhile, encrypted technology such as WhatsApp facilitate global terrorist networks and makes planning attacks easier, and the huge amount of publically available information, such as satellite images, makes reconnaissance more efficient. The difficulty for the global community in addressing this is the trade-​off between privacy, freedom of speech, and checks and balances. Social media firms are under pressure to do more and regulation is likely to play a growing role.

Risk management: preparing not predicting

For the business community, understanding how the forces at play manifest themselves at a commercial level is a challenge. Some businesses may be postponing putting in place a framework to analyse the geopolitical landscape because it is too daunting or too fast moving. However, any business – large or small, international or local – can be impacted by geopolitical volatility, and preparation is key.

An organisation’s approach must be tailored to their own particular needs. However, one message that is true for all businesses is that taking a multidisciplinary, integrated approach which achieves engagement with all parts of the organisation, is a critical success factor.

Geopolitical threats manifest in a wide variety of ways, which are often unpredictable, and so including as many different perspectives from across the business is key to developing an intelligence-​led and threat-​based capability. Business leaders must therefore put in place a structure that works across, as well as up and down, their organisation’s business units and departments to identify the threats and understand how they are connected.

This should start from the C‑suite, but the risk manager should play a key facilitating role in bringing the right people together and ensuring challenging questions are being asked. Ultimately, it is not about predicting what might happen, but about ensuring the business is thinking in the right way.

John Ludlow is CEO of Airmic, the association that represents UK risk professionals. Click here to download a copy of Geopolitics: Understanding external threats to an organisation, written in partnership with Willis Towers Watson.

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