ZURICH: Help Point Perspective
Political Risk Can Be the Catalyst for a Strategic Risk Initiative
By FRANCIS BOUCHARD, head of government and industry affairs at Zurich Insurance Group.
In a globally intertwined economy, geopolitics and political risk are increasingly seen as key elements of strategic risk. In fact, the corporate C-suite and boardroom now understand that the core drivers of risk are often impacted -- if not driven -- by global, political and economic developments.
As a result, over the last decade, corporate leadership has developed a much deeper understanding of risk management and the role of politics and economics. Today, global political risks are rarely absent from any major external challenge: be it the catastrophic consequences of Hurricane Sandy in the Northeast; or the coming fiscal cliff debate that threatens to bring on a U.S. recession; or the changing political landscape of China. And while political risk analysis remains increasingly complex, good fact-based analysis can help assess the direction of global change and how these external risks turn into internal risks.
A focus by risk management on global economic and political risk can serve as an organizational catalyst that can help its leadership formulate strategic risk questions that address these complexities, and opportunities, inherent in the current environment.
Organizations today may understand, at a fundamental level, how these complexities affect their businesses. And that, in turn, can reposition risk management into a more strategic function with the organization.
It can be a challenge to break out of the more traditional role of risk management, which has historically focused on risk mitigation rather than strategic risk analytics. We are engaged in conversations with customers, brokers and other stakeholders that encourage a better appreciation of the role of risk management in economic, political and strategic risk issues. But it is also an opportunity for risk management to help organizations prepare for the risks and the opportunities that will accompany the changing global economic and political landscape.
December 1, 2012
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