It’s that time of the year again when predictions for the year start coming out and there are two that we keep an eye out for (Eurasia Group and World Economic Forum). EG just came out with theirs and we will be combining it with the World Economic Forum and sending out guidance to key clients and their executives at the end of January. This would be a great opportunity for you and your organization to elevate your game and provide incredible value to your stakeholders and executives as well.
First, here is the Top Ten List of Risks:
- China loves a vacuum
- Global tech cold war
- US-Iran relations
- The erosion of institutions
- Protectionism 2.0
- United Kingdom
- Identity politics in southern Asia
- Africa’s security
And here is the scary summary: “But if we had to pick one year for a big unexpected crisis—the geopolitical equivalent of the 2008 financial meltdown—it feels like 2018. Sorry.” We will not have the space to provide commentary on each of them and I would rather that you read the report and formulate your own opinion anyway.
I will assume that unless you are in a unique business that I cannot imagine, there are at least some of these that will impact your company directly? There are others that will impact you indirectly through your suppliers? Would you be surprised if I told you that supply chains are mentioned a few times in their report?
Let me just point out some of the obvious points from EG that will have an impact on sourcing and category strategies. China is looking for a breakout year in 2018 and the vacuum being created by the US is the perfect opportunity for them – especially in the areas of technology. We may need to deal with a whole new set of standards and practices being pushed by China across the global economy. Accidents have a higher probability this year – cyberattacks, North Korea, Syria, Russia are prime examples. The cold war will have a new front – technology. Major race underway between USA and China for dominance in this sector. NAFTA uncertainty will mean troubles for Mexico (how many of your suppliers will be impacted by this?). Protectionism is on the rise – especially in the digital economy and innovation intensive industries. BREXIT will have repercussions for Britain. And the security for Africa poses much more risk for the nations beset by militancy and terrorism slowing down progress across the entire continent.
“Concerns about the prospects of a geopolitical depression form the backdrop for our top ten risks this year.” If EG is partially accurate, this will have significant impact in all our jobs – even if you think you are a domestic company insulated from the world (there is no such thing anymore!). But let me get back to how you can utilize this to elevate your game.
- Take the time to read it thoroughly, educate yourself and try to gauge the impact on your company and your supply chain. You will sound much more informed and erudite and will be able to add much more value in discussions
- Make this mandatory reading for everyone in your group and facilitate a discussion amongst them to assess the impact on your company and your category strategies
- Identify 10 key suppliers that you think will be impacted by any of these risks and send them a query about how they are addressing those risks
- Incorporate the impacts of these risks into your sourcing events in 2018
- Modify your category strategies appropriately based on these risks
- Develop a risk profile for your company (utilize impact, likelihood and controllability)
Once you have done the above, prepare a synopsis or report and circulate it amongst your key stakeholders and executives. Point out the things that they need to worry about in their sphere of influence. Offer to come in with a presentation and facilitate a discussion at their next staff meeting. I would encourage everyone to take the time to read through the entire report (only 25 pages) and draw as much value for your company and yourself as you can. This would be a great way to elevate your game for 2018.