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Political risks are obvious as the transformation of former developing-countries into adult economies bring more unstable - undemocratic - regimes to the forefront. Those new players have an ever growing impact on the world economy. The problem with the new players is that they are not mature, and prone to huge shifts in attitudes and policies, without appropriate communications. Because they offer the best growth prospects, investors often bet on a hypothetical stability, only to be swiped away with the next change of leader.
Huge risks also lie in our "new" environment, as our impact on climate change does seem to increase pace. Most scientists (GIEC notably) forecast a worsening of extremes. Natural catastrophes frequency and severity will increase, average conditions will worsen, and business disruptions will increase, as well as damages, potentially deeply harming markets.
The limitations on finite resources to ever more hungry markets will add another layer of human conflicts on existing problems. We already see international tensions on deep sea-resources, north-pole explorations, land acquisitions etc. This could however become a driver toward new frontiers and technologies, and finance could be put back into its primary role of intermediating activities, risks and time.
Finance itself became a systemic risk, in itself as seen in the sub-primes debacle and the Lehman fall-out, but also because of the leverage of those huge sums. Currently, thanks to leverage, small causes have much bigger effects than they used to. A few years ago, a liquidity crisis in Thailand was a crisis in Thailand. Now, a crisis in Korea would severely rock the world - think about Greece.
The last risk is this new global interdependency. The contagion from one area, one industry, one product, is instantly communicated in a feed-back loop to the rest of the system. There used to be more insularity between geographies and activities, and it was easier to find contra-cycles.
How can we prepare for a more uncertain future? Strategic and risk planning have to change. To put it briefly, companies should now aim to build up and take part into different ecosystems, partnering with larger organizations, smaller players, consultancies, free-lances, universities, governments, students, researchers etc. This has several advantages for all players, and mainly it allows for company to detect and adapt to changes by improving redundancy and openness. Risk-avoidance is realized through a more fluid but fatter structure. The parts should be held together by common interests and sense of purpose. We will come back in the coming weeks on what we have in mind as new methods for strategic planning.
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