‘Black Swans turn Grey’
The risk landscape is undoubtedly shifting. PricewaterhouseCoopers or PwC, invoking Nassim Nicholas Taleb’s recent book, posit that ‘Black Swans’ are increasingly ‘turning grey’. By this, they mean that previously catalytic and unforeseen events are becoming more regular; betraying an increased level of uncertainty faced by the global community in the face of growing connectivity and dependency. Their approach is to expand existing ERM (Enterprise Risk Management) frameworks ‘by innovating around them, adding tools and techniques such as scenario modelling, predictive indicators and ‘reverse stress-testing’.
PwC is right to identify a changing terrain, in which political developments play an increasingly important role, however traditional approaches to Political Risk themselves must adjust to remain relevant in the 21st century. So while organisations will benefit from integrating Political developments as a component into their ERM systems, more fundamentally, Political Risk as a discipline needs to be re-calibrated.
Political Risk Today
With the onset of globalization, Political Risk is an increasingly pertinent concern for multinational companies and investors as they attempt to tap into, and harness, the velocity of the global marketplace. New challenges and opportunities are sprouting up, driven by increasingly social and politically aware young populations across the globe who are armed with innovative & enabling forms of technology.