I imagine your inbox is peppered with annual wrap-ups around now. Risks included ongoing conflict, energy insecurity, climate volatility, cyber, new regulations (sustainability to fraud), inflation, more conflict, and varying degrees of economic prosperity or malaise.
How relevant each issue is will depend on what you do, where, with whom, and how.
That’s easy to write, harder to fathom in reality. I developed a matrix that might help.
MATRIX
Let’s use examples to help illustrate the point. Imagine you’re a manufacturer.
Alternatives: Tariffs, import restrictions, or conflict have made a commodity used in a component you purchase more volatile. Trying to understand (in detail) the complexities doesn’t make sense, but you might feel the sanctions exposure is concerning. Can you find alternative components? Do other providers source the commodity from stable markets? How does that impact timelines and costs?
Adapt: You’re in an industry on the wrong end of the ESG perception spectrum. Consider how you could innovate and create greener products. Initially, they will cost more, but is a part of the market willing to pay a premium? Or do you double-down, recognising your products still have a need as competitors shift to try and appease consumer mores?
Act: Supply chain transparency requirements are increasing, especially around sustainability and human rights. Can you quickly audit your supplier list to determine where the greatest exposure might lie (which countries, sectors, products/services confer the highest risk)? Triaging the dataset down and starting there will undoubtedly be easier than a wholesale review (for now). It may require a strategic rethink of elements of your supply chain.
Get help: Workforce demographics are changing, and what was once acceptable on the shop floor is no longer. But who feels what? Where do people not know what’s expected of them? Where can’t people access support (to raise questions, suggestions, or concerns)? Do specific teams present elevated behavioural risks (low trust, low accountability)? Get data.
Risks will not always sit nicely in one quadrant and may travel between them. The critical step is understanding what to prioritise and where and when to act. The traditional approach of examining whatever appears most scary might skew our focus toward something indirect and hard to influence (e.g., geopolitical conflict and sanctions), ignoring sizeable exposures (fraud, psych safety, innovation constraints, workplace disputes, etc.) that we can more immediately change. The trick is striking the balance…
Ethics of bribery
In the perennial compliance vs. ethics debate, where do bribery and terrorism fit? Straightforward, no? Let’s test that with two not-so-hypotheticals:
Before the war, Hamas had many money-raising levers. In one scheme, aid workers might be ‘encouraged’ to patronise a café where they’d be asked to pay a few hundred dollars for a coffee.
On the Uganda and Kenya border, militias, terrorists, and corrupt soldiers might threaten harm (abuse to rape) unless a bribe was paid for safe passage.
Should the aid worker or terrified traveller refuse to pay? Asking the individuals to resist is a big request. You might feel the “greater good” done by the aid agency negates the payment. But would donors agree?
Paying to avoid harm seems clear-cut, but why might people drive around the borderlands? If they’re doctors servicing remote rural communities, does that make the payment less avoidable than gap-year rich kids getting edgy footage for TikTok?
Labelling things as “good or bad” risks shutting people down. Discussing the grey areas increases awareness and understanding, which is crucial to combatting bribery.