Page 5 - Risk Management Bulletin February 2024

RMAI BULLETIN FEBRUARY 2024

How Geopolitical Risk

can disrupt the whole

Risk Management

Strategy of an

Organization

Geetanjali Matai

Introduction military conflicts, terrorism, sanctions, trade disputes,
political instability, and alterations in government
Geopolitics
policy.
Geopolitics is the study of how geographical elements
like topography, resources, and position, together with Geopolitical risk is a crucial factor for businesses and
political and economic elements, influence how gov- investors because it can increase market uncertainty
ernments behave in international relations and how and volatility, which can have a negative impact on
they interact with one another. It entails examining investments and business operations. Companies that
how geography, power, and ideology affect nation- operate in countries or regions with a high geopoliti-
state behavior and how they affect international af- cal risk may experience increased regulatory hurdles,
fairs, conflicts, and alliances. Geopolitics also consid- supply chain disruptions, and a decrease in demand for
ers the historical, social, and cultural determinants of their products.
international relations and the dynamics of world
power. It is a challenging field that changes constantly In addition to economic and financial effects, geopo-
and necessitates knowledge of many academic fields, litical risk can have significant social and humanitarian
including political science, geography, history, and eco- repercussions, such as population displacement, vio-
nomics. lations of human rights, and environmental harm.
Understanding and effectively managing geopolitical
Geopolitical Risk risk is therefore essential for both businesses and
policymakers.
Geopolitical risk is the possibility that political and
economic events, actions, or circumstances in a spe-
cific country or region will have a significant impact on Types of Geo-political Risks-
enterprises, financial markets, and international rela- Emerging geopolitical threats have a growing impact
tions. It can be caused by a variety of factors, such as on businesses and organizations worldwide. These

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