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We are at an inflection point in geopolitics. The spectre of war has returned to Europe. Decoupling between the economies of the US and China, the world’s two largest economic blocs, is reversing globalisation as we have known it. The International Monetary Fund’s (IMF) World Uncertainty Index readings have hit elevated levels in recent times. This report demonstrates why risk and internal audit professionals need to relook at the way they collaborate, as their organisations build resilience amid the maelstrom of geopolitical risks. Elevated uncertainty created by an increase in volatility, complexity and pace of change in a new geopolitical era calls for the following approaches to be adopted:
- Be agile in responding to the challenges of ‘once-in-a-generation events’ occurring with regular frequency.
- Scenario planning and horizon scanning are the keys to preparing for geopolitical risk.
- Stereotypical profiles of risk and internal audit professionals need to be reviewed to ensure they meet future needs.
- Take a long-term view of geopolitics.
- Stay true to the organisation’s purpose.
- Geopolitics is not just all about downside risk.
- Risk and internal audit need to operate as strategic enablers by providing executive decision-makers in their organisations with information that is appropriate and timely as they make difficult decisions in a challenging environment.