Climate, technology, geopolitical risks interconnecting – Control Risks CEO interview

The keynote risk panel was such as lively debate at this year’s conference that an obvious question for Nick Allan, CEO of Control Risks, was what he would have liked to say, but could not fit within the confines of this conversation, hurtling through the major risks that are facing organisations today.

The panel focused largely on the interplay between geopolitical risks, back in vogue since Russia’s catastrophic invasion of Ukraine, emerging technologies such as artificial intelligence, and the all-encompassing threat posed by climate change. The interconnectedness of these risks was what Allan picked up on.

“Tangy [Morgan, Advisor, Strategia] opened up the debate around fairness and justice in relation to climate change,” Allan told Airmic News. On the other hand, John [Elkington, founder and chief pollinator, Volans] talked about sustainability, and he has in-depth knowledge and understanding of that topic.”

“I’m interested to explore thinking how this plays out in the developing world, in terms of the solutions and the impacts of climate change, because climate change has huge geopolitical consequences,” Allan said.

“We've already seen these consequences in some events, in terms of driving immigration, which is driving politics. Climate change never gets solved, but it gets managed. And it is in the developing world – India, China, Africa - where the action has to be – and how it’s done fairly – which I think is an interesting follow-up discussion we could have got into.”

There were “flickers of answers” in the panel, even to this follow-up debate, he suggested, such as the potential offered by emerging technologies, including artificial intelligence.

However, geopolitics as a source of divisiveness is a significant threat, he emphasised.

“You have a global problem [climate change], that requires global solutions, but at a time when global cooperation and collaboration is not exactly good right now,” Allan added.

Talk of globalisation being rolled back or so-called strategic economic “decoupling” between the West and China has become rife, but trade and prosperity across borders remains economically vital, Allan stressed.

“The US has done more trade in the last 12 months with China than it has ever done before,” he said.

“China does things cheap or cheap-ish; it does accurately; and it does high-end manufacturing, to a level that nobody else can do,” Allan said. “So, you might rebuild your facility in Mexico, or in Thailand, or in Vietnam, but it’s just not as good in many ways. Some companies have a major problem here,” Allan said.

Companies are being compelled to make tougher decisions on issues such as supply chain risk management than just a few years ago, before the pandemic, pre Ukraine War and pre China tensions, he explained.

“When drawing their risk matrix, the risks that were high impact, but highly unlikely, most companies acknowledged them, but did they put resources and planning around them? No, they didn't. Whereas now, if it's on the risk matrix, companies are really going through worst-case scenario planning, and putting resources behind it,” Allan added.

Cliches usually have an element of truth to them, he noted, including that the worst time to learn about crisis management is during a crisis. For a company like Control Risks, he explained, the change in attitudes to risk means more business.

“A lot of the work we're doing on the political risk side is around scenarios and wargaming,” he said, adding: “We've had a boom in work for companies asking us to set out scenarios for China and Taiwan – the worst case scenario being all-out war.”