Managing and Exploiting Geopolitical Risk
Executive education for business and investment professionals
Overview
Why understanding geopolitical risk is essential for business and investment professionals.
In a more turbulent, unpredictable world knowing how to assess geopolitical risk is a core skill for business and investment professionals. However, much of the geopolitical risk information and analysis that is available to the investment management industry is not well-structured or sufficiently timely for informed decision-making in complex, rapidly moving situations.
Generic, commercially available geopolitical reports are usually heavy on description and light on usable analysis. Data and opinion is typically acquired and distributed in an unstructured way. There is no integrated advice on how to tailor responses and little appreciation that users have different investment styles, philosophies, corporate ownership, time-frame and liquidity constraints. Consequently, the ability to astutely analyse potentially disruptive geopolitical events and their investment implications is frequently ad hoc and sub-optimal.
To improve geopolitical assessment competencies and embed them into the skill set of the investment community, Cognoscenti Learning has developed an executive education curriculum which teaches investment management executives how to professionally evaluate geopolitical risk. Integrating geopolitics into your risk management process will reassure clients, allow you to exploit market opportunities ahead of competitors, facilitate sound decision-making, improve operational agility and demonstrate a best practice approach to holistic risk management.
In recent surveys by the Bank of England, business executives have ranked geopolitical risk as the most challenging to manage – above cyberattacks, financial disruption and even an economic downturn. Business executives believe geopolitical and domestic instability will detrimentally affect global business and their own companies in the coming years according to a similar survey by leading management consultancy, McKinsey and Company. In the investment management industry, clients increasingly want to know what measures are in place to inoculate their investments from geopolitical disruptions and shocks. Participation in this curriculum will go a long way to reassuring clients that you are taking this risk seriously.
Using best practice geopolitical risk management and planning strategies to achieve optimal investment outcomes.
Our curriculum is initially vocational and skill building, segueing to learner centred and participative. It incorporates a blend of innovative approaches and delivery techniques. The curriculum is modularised, competency based and aims to expose attendees to a carefully selected set of learning experiences ensuring that they think more holistically about risk and learn best practice risk methodologies and analytical frameworks.
Using this learner-centred approach, incorporating foresight, scenario building, role playing and simulations, attendees will analyse real and imagined geopolitical crises and developments germane to their operating environment. The aim is to enhance their ability to assess geopolitical risk and opportunities in a structured, integrated manner and develop considered response options for senior decision-makers.
After initial training in geopolitical risk procedures and methodologies, attendees will be encouraged to develop their own ideas about how best to evaluate and exploit geopolitical risk and apply them in the interests of their company or fund.
Modules are delivered over a time-frame and in a manner suited to the specific requirements of an enterprise or professional cohort. The primary goal of the curriculum, incorporating four distinct modules, is to develop and practice critical thinking focusing on the likely consequences and impact of significant geopolitical events in a variety of contexts, sectors and geographical locations. The initial course can be followed by one-on-one coaching sessions working on client specific challenges.
Case study informed simulations provide attendees with hands-on experience, sharpening practical skills and facilitating group learning.
Curriculum outline: attendees benefit from applied learning and real-world case studies facilitated by experienced practitioners.
| Module | Sub-Module | Content | Learning Outcomes |
|---|---|---|---|
| Risks | Risk Overview | The importance of geopolitical risk. | Critically evaluate the risk associated with political and security challenges. |
| Risk Typology | The geopolitical risk spectrum – from war and military conflict to pandemics, terrorism and cyber threats. | Identify the risk types and their likely impact within an investment context. | |
| Strategic Foresight | Foresight types | Based on context, timeframe and information availability what type of foresight could be used? | Use foresight to understand systemic risk and interpret change signals. |
| Process | Identify and evaluate knowledge process and scanning regimes for political, economic, environmental, social, technology and legal data. | Design foresight scanning tools and translate data into insight. | |
| Methods and Tools | Methods | Identify best practice methods for the context and task. | Understand how different methods can be used to assess risk. |
| Tools | Evaluate strength and weakness of various analytical tools. | Apply different tools to collect and analyse data and generate insight | |
| Case Studies & Scenario Planning | Study relevant cases, identify and analyse information and trends to conduct scenario planning around different geopolitical challenges. | Use prior learning to rigorously analyse and articulate geopolitical threats and their likely consequences for investment strategies and fund management. | |
Strategic foresight is the most effective mechanism for anticipating the consequences of systemic risk and improving corporate agility, resilience and strategic thinking.
In the past, successful companies have distinguished themselves from their less successful peers by their ability to anticipate the future commercial operating environment and identify key information, trends, and potential outcomes from large data sets. When the environment is stable, such extrapolative thinking and forecasting often works well. However, when volatility and disruption increase, forecasting based on historical data works against sound decision-making because it cannot account for transformational change driven by technological and geopolitical forces.
In an era of globalisation, interdependence, hyper-competition and rapid change, foresight is the most effective mechanism for assessing the consequences of systemic risk and improving corporate agility, resilience and strategic thinking.
Foresight can broadly be defined as the ability to increase awareness and knowledge of the external environment allowing companies to react promptly to changes in linked domains. Foresight can be deployed to identify, and interpret, change signals. It is essentially an early warning tool that affords deeper insights into complex, fast moving events. This facilitates decision-making by identifying risk and market opportunities before they become visible to competitors.
Course Assessment and Learning Aims
At the end of the course, participants will:
• Be able to use geopolitical risk analysis to set, or modify, existing investment processes and objectives;
• Design a bespoke geopolitical risk management framework relevant to the participants’ in-house investment style, business goals and operating environment;
• Sharpen personal investment management capacity by defining geopolitical risk analysis as a principal and concurrent consideration in decision making, not an afterthought;
• Work to include geopolitical decision making in the investment style, compliance process and culture of the company/management fund.
Course Educators
Day 1
Morning
– Introduction and Course Overview
– Session 1: Understanding and Assessing Geopolitical Risk
• What is geopolitical risk?
• Why is it important to understand and integrate geopolitical and international security developments into risk management strategies?
• Risk typologies – from war and conflict to non-military security challenges.
• Finding and making sense of geopolitical information.
• Disseminating knowledge and insights to decision-makers.
– Open Discussion
Morning Tea
– Session 2: Strategic Foresight: Making a Difference
• What is strategic foresight, why is it important and how is it acquired?
• The foresight process – from data, information and knowledge to insight and action.
• Foresight methods and tools. Providing better situational awareness and forecasting using experts, models, trend analysis and participatory interaction.
• Choosing from the Futures Diamond tool kit – simulations, gaming, road mapping, delphis. What are they and how can they be used to help assess risk?
– Open Discussion
Lunch
Afternoon
– Session 3: Case Study 1: Epidemics and Pandemics
The incidence and seriousness of infectious disease epidemics is rising. Their spread has been facilitated by globalisation, air travel and urbanisation. Roughly 30 have been identified, including HIV/AIDS, rotavirus, Ebola, SARS (Severe Acute Respiratory Syndrome) and the H5N1 bird flu. Regional outbreaks have caused significant numbers of deaths, political and social disruption and economic losses.
But what would be the consequences of a massive infectious disease pandemic on the scale of the 1918/19 Spanish flu which killed between 30-50 million people, more than all those who perished during the First World War? In this case study we focus on the economic and financial implications of the 2003 SAR’s crisis and 2014 Ebola epidemic as potential harbingers of the next pandemic.
– Open Discussion
Afternoon Tea Break
– Session 4: Infectious Disease Simulation
Attendees will participate in a guided simulation exercise around an infectious disease epidemic. They will be asked to assess the financial and investment implications for their company/clients and provide advice to their senior managers.
– Open Discussion
Day 2
Morning
– Session 5: Case Study 2 – The North Korean Nuclear Crisis
Under the leadership of Supreme Leader, Kim Jong-un, North Korea has accelerated its ballistic missile program since 2011 and is now on the brink of achieving its long held strategic goal of being able to strike the continental United States with a nuclear armed, intercontinental ballistic missile.
This has precipitated a crisis involving Asia’s great powers – the US, China, Japan and Russia – threatening regional stability and raising the prospect of a military confrontation between North Korea and the US with global consequences. Among them are a destructive war on the Korean peninsula that could escalate to a nuclear exchange between North Korea and the US and major disruptions to commerce and trade which could set back the fragile global recovery and lead to a severe recession.
In this case study we will look at the origins and dynamics of the crisis, the way in which great power politics intersect with trade, investment and security and explore likely scenarios and outcomes.
Morning Tea
– Session 6: Learner Centred Capstone Exercise
Informed by two case studies and a guided simulation exercise, attendees will demonstrate their new-found knowledge and skills in a capstone exercise based on an imagined conflict between the US and North Korea. They will be confronted with a series of fast moving, geopolitical events which will require them to provide sound advice to their senior managers on portfolio risk as well as identify investment and trading opportunities. Attendees will be encouraged to develop bespoke frameworks and strategies for assessing geopolitical risk that are compatible with their company’s interests and culture.
Lunch
Afternoon
– Session 7: Attendee Presentations
As part of the capstone exercise, attendees will formally present their analyses and advice to the CEO and his executive committee after which they will be questioned and assessed on their presentations.
– Session 8: Lessons Learned and Attendee Feedback
This is an opportunity for attendees to discuss lessons learned and provide feedback to the course presenters.
Register your interest
You can register your interest in our courses via the form here, or by telephoning +61 2 8001-6432 between 08:30 and 17:00 Monday to Friday.
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