McKinsey Survey shows geostrategic risks are higher than ever

The latest results from the McKinsey Global Survey on globalisation provides further reinforcement on the negative impact of disruption on the global economy over the next five years. The cross continent survey shows that senior executives now expect potential disruptions to be be very severe with the largest number of respondents  ever recorded holding negative views - greater than in the wake of the global financial crisis in 2010 ( as shown above). 

While responses varied by industry with uncertain or restrictive regulatory environment being most often cited, political and social instability was the second most cited concern.  Perhaps the most startling information revealed was the almost complete lack of preparedness for dealing with geopolitical and political risks. Despite more than two-thirds of executives reporting their organisations saw these risks as important, less than 13 percent were able to cite their organisation as having taken any steps to address the risks. What steps were taken were generally ad hoc internal analyses as events occured (43%) while a very small number (18%) integrated comprehensive scenario methodologies into their strategic planning process.

If Government thinks the private sector is ready to deal with a crisis, this report which covers global business should dispel any such illusion. McKinsey provides common -sense advice to assist executives to manage such events: identify the trends and disruptions that are specific to their organisations; assess the potential impact of risks across a range of scenarios; develop initiatives to mitigate the risks or capture opportunities; establish a decision-making process that prioritises initiatives. Seems like sound advice.