Reading the Mail

By: Dr. Gary Anderberg

Sep 26, 2024 — In an essay on Napoleon, Ralph Waldo Emerson* discusses the way Napoleon let incoming mail sit for three weeks before reading it. Most trivial issues had been resolved after three weeks. Only if an item was still unresolved at that point did it require the Emperor's personal attention. We've been letting EY's discussion of likely 2024 geopolitical risks age discretely since last December to see what issues still have legs mid-year. Let's look at a few that still loom large this fall.

• The Bob Dylan effect: As in the times they are a-changin'. Not long ago most of the globe seemed settled in a stable set of commercial patterns. Supply chains stretched almost to infinity, and container ships crisscrossed the oceans with a monotonous regularity. The consensus began to wobble before COVID, but that event tipped a great deal of the world's commerce into seeking new patterns to shorten and simplify supply chains through near-shoring and friend-shoring vital suppliers. Now we all have serious risk decisions to make concerning how we interact with the rest of the world. Our strategies have to become what EY calls "geopolitically robust." Good call by EY.
• The AI dragon: Every major political entity seems to be looking to regulate artificial intelligence (AI) a bit differently, making the harnessing of this new tech exponentially more complex for multinational risk programs. Are you following the Bletchley Declaration, the G7 Hiroshima Process, and/or more local policies, as they evolve? Note that this issue isn't about how AI addresses any particular business need. It's about how regulatory compliance impacts AI-based apps. For example, how does the General Data Protection Regulation apply to specific uses of GenAI?
• The joy of tariffs: Trade practices seem to become more political all the time. This politicization ties into the global elections cycles as we see regimes shifting, sometimes dramatically, in places that have been boring — er — stable for years. New regimes are rethinking how they want to trade and with whom — and at what price.
• Diversification/de-risking: In an EY survey a year ago, 99% of CEOs said they were planning to reconfigure supply chains, relocate operational assets and make other responses to geopolitical changes. Risk may be our business, but our employers don't want it to be theirs. The widespread corporate flight to some better idea of safety and security shows no signs of abating.
• The commodities quandary: Quick, name a commodity that's been stable recently. All commodities, food included, have become carnival rides. Wars, pandemics, wild weather and shifting political alliances will do that.

All in all, we'd say that EY hit pretty close with their 2024 forecast. So much so that we recommend reading the whole report if you didn't see it when it first came out. It has aged well. Napoleon would probably agree — time to deal with the mail.

We've pointed out before in these august pages that there has seldom been a more challenging time to be a risk manager. Lucky us. What on earth did our predecessors do to stay engaged and awake back when everything was boring and stable?

*American philosopher, poet and best friend of his Concord neighbor, Henry David Thoreau.