In a challenging year marked by geopolitical events, 69% of companies around the world reported supply chain disruptions due to political events, according to a new report by WTW.
The “How are leading companies managing today’s political risks?” report, now in its seventh annual edition, reflects a shift from alarm to preparedness. The survey found that 96% of companies have invested in new political risk management capabilities. These investments include enhancing corporate processes and creating cross-functional teams.
State-sponsored supply chain disruptions, partly resulting from disruptions in the Red Sea and “grey zone aggression”—actions intended to weaken a country without open warfare—are among the top business concerns for 2024. For the first time, grey zone aggression has entered the top 10 risks.
Additional findings from the report include:
The top 10 risks for 2024 are the following.
“After a couple of challenging years, companies seem to have accepted that significant political risk losses are the new normal and are working on building risk management capabilities,” said Sam Wilkin, director of political risk analytics at WTW. He highlighted concerns about infrastructure attacks, such as sabotage of pipelines and cables, and attacks on assets in international waters, facilitated by the proliferation of drone technology.
An oil industry executive noted that while political risk is acknowledged, it does not deter operations and is managed within the broader risk management framework. Meanwhile, a European energy executive mentioned facing hybrid or grey zone threats due to the Ukraine war, including sabotage and cyberattacks like the Nord Stream attacks.
The conflict in Ukraine remains the top risk, followed by concerns about elections. With more citizens voting in 2024 than any time in the next few decades, managing political uncertainty and potential business repercussions is a significant challenge. Panelists expressed concerns about trade wars, rising protectionism, and populism.
The survey and interviews were conducted in March and April 2024 by Oxford Analytica, with responses from 50 companies worldwide, 64% of which have revenues exceeding US$1 billion.
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