Navigating geopolitical risk: building resilience requires collaboration in a challenging world
About the report
The aim of this thought leadership report is to provide internal audit professionals with ideas, approaches, and practical tips to help support their organisations in navigating geopolitical uncertainty. Geopolitical uncertainty has for several years been ranked by Chief Audit Executives as one of the top risks facing organisations, as evidenced in our annual Risk in Focus survey. In fact, last year it was ranked the third biggest risk. However, despite its growing prominence and severity, geopolitical uncertainty is still the risk that, according to our research, internal audit spends the least time auditing. There is growing recognition that this needs to change, and this report aims to support internal audit professionals in making this change.
The backbone of the research that supports the report was based on a series of six scenario-based roundtables attended by senior internal audit executives, senior risk management executives and geopolitical experts, that form case studies in the report. These are:
- Economic meltdown: A global crisis on the horizon?
- Conflict involving China: Taiwan and the South China Sea
- War in Ukraine: Global implications
- Climate change and geopolitics
- US politics and democracy: Challenges to global stability
- Cyber security and geopolitics
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- Geopolitical risk is a strategic risk that does not sit in a silo and should not be viewed as a standalone risk. In our increasingly interconnected world, geopolitical events exacerbate and interlink with existing business-critical risks. For example, supply chains, cybersecurity, legal and compliance, reputation, and financial stability.
- Internal audit should not work alone in grappling with geopolitical uncertainty. Internal audit needs to work more closely together with risk management to support their organisations in navigating the perfect storm of interconnected risks in this new geopolitical era.
- None of us has a crystal ball and can predict future events. But what internal audit functions can do is work with their colleagues in risk to make sure their organisations have robust scenario planning processes in place, for when the unexpected does happen. Effective scenario planning will help to support greater organisational resilience.
Risk in Focus 2023
Fraud is on the rise: step up to the challenge
Harnessing internal audit against climate change risk
Mind the gap: cybersecurity risk in the new normal
Introduction to supply chains
Emerging risk assessment in internal audit
Geopolitical risk and the role of the internal auditor
Deliver insights with macroeconomics