The strategies and principles boards must adopt for global business security

In a recent report released following the first of three conferences organized by the Esade Corporate Governance Center and EsadeGeo, Juan Moscoso del Prado says that companies and boards of directors should be placing national security at the top of their global agendas. 

The senior fellow at Esade’s Centre for Global Economy and Geopolitics (EsadeGeo) stresses the importance of understanding the changes brought about by a decade of disruption, including the increasingly influential role played by China, the country’s battle for technological dominance with the United States, and a global environment dealing with increasing levels of conflict. 

Global security is a constantly evolving concept

In the face of this ongoing uncertainty, Moscoso del Prado says there are three vital strategic lines of action for boards to implement, underpinned with a series of strong principles to ensure a strong, secure and positive geopolitical future.  

The principles of geopolitics

Multiple geopolitical risks, including the climate crisis, conflict, mass migration and the loss of human rights, are affecting global supply chains. At the same time, innovation is constantly and rapidly evolving into an increasingly valuable ecosystem.  

To combat these risks and embrace the opportunities offered by unprecedented advances in technology (not least AI, machine learning and robotics), boards must reinforce geopolitical strategies with rigorous governance. 

This strong focus on geopolitics requires a series of underlying principles (Arthur D. Little): 

• Constant evolution and adaptation by exploring and producing new forms of value, encouraging new user interactions, and ensuring flexibility. 
• A ‘win-win’ approach to survival that rewards value created for users and offers incentives for fair and mutually beneficial interactions. 
• Simplicity, transparency and trust in all interactions. 
• Follow value, not status, and challenge the status quo to create and protect value. 

Three essential items on the geopolitical agenda

Using these principles as a solid foundation, companies should adopt three essential strategies to integrate geopolitics into the board agenda: geopolitical analysis, strengthening connections, and managing risks and opportunities. 

1. Geopolitical analysis 

Regular training activities for board members and executives to instill an ongoing awareness of geopolitical insights are essential. Senior leaders must be able to recognize and respond to trends and scenarios in which they are expected to play a role, including local and global regulations and key legal advances. Boards without this level of formal training will be at a major disadvantage when it comes to identifying risks and opportunities, and will flounder when it comes to instilling organization-wide confidence. 

2. Strengthening connections 

Public and private sectors can no longer operate individually; in today’s conflicted world, the entire value chain is linked to national security. Research centers, universities and think tanks are invaluable sources of vital research and insight. Organizations must nurture these relationships to implement the latest intelligence and ensure knowledge transfers. Indeed, national security relies on a high level of cooperation between civil, private and social networks. 

3. Managing risks and identifying opportunities 

Technology and innovation races between companies, sectors, countries and continents are becoming increasingly competitive. Against this backdrop, national and international bodies are developing and implementing governance and regulations that attempt to keep up with the rapid pace of change, all of which have a massive economic impact on organizations and nations alike. Proactivity is essential: boards must develop early action strategies in key sectors that incorporate national and global factors, while allowing for flexibility.  

The future of geopolitics in business

Global security is a constantly evolving concept, and businesses cannot ignore their increasingly vital role in the geopolitical arena. In an uncertain and constantly evolving world, security must remain in line with these global transformations, challenges, risks and threats. 

Understanding and managing risks and opportunities is key for competitiveness and for a secure and stable society

By adopting these principles and strategic goals, boards can strengthen relationships between public and private sectors to nurture an increasingly interconnected global environment. 

We are well past the point where geopolitical issues are an area for boards to discuss reactively. Taking responsibility for understanding, anticipating and managing risks and opportunities are fundamental not only for business competitiveness but also for a secure and stable society.