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Managing US-China strategic competition

The context
As US-China strategic competition accelerates, foreign businesses in China are on the front line, needing to react to ever changing regulatory, national and economic security policy that increasingly complicates the local operating environment.

For a financial services company with strategic levels of China exposure, being reactive wasn’t enough. They wanted to understand how they could reposition their approach to geopolitical risk management to be ahead the risks and able to respond before it became too late.
Our foresight
For us, being proactive in geopolitical risk management is about understanding the fundamental drivers behind how decisions are made.

Working with our financial services client, we enabled them to establish a framing narrative for what is driving policymaking in China and then deploy this to shape scenarios for potential alternative futures, assess the probability of their outcome, judge what risks this created for their firm and consequently how they should respond.
What we achieved
Working together with our client’s global risk team, they were able to mature their risk management process by:
  • Becoming more confident in making qualitative judgements on their China exposure.
  • Adopting a framework for effective risk weighting and rebalancing.
  • Introducing observation of lead indicators to identify the speed and the direction of change in geopolitical events and trends.
  • Focusing on those risks most relevant to them and matching them to their asset exposure.
  • Knowing where to look for reliable signals and become more confident in identifying what is important and relevant.
Why it matters
Geopolitics has become a strategic risk. This creates an expectation amongst the C-Suite and Board that their companies can effectively interpret and manage the risk. By adopting our more rigorous approach to assessment in geopolitical risk management, and working with us to identify where to look for signals of change, decision makers are more confident in making judgements on how to respond to what lies ahead.

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