A recent article in Risk Management magazine focusing on using insurance to mitigate political risk prompted a conversation about the growing complexity of risks in our modern age.
(you can read the article here)
When assessing risks and their potential impact on your organization you have to address them from an integrated and holistic viewpoint. For political risks it is correct that instability, trade wars and barriers can potentially have an enormous financial impact, and insurance might be a good way to mitigate that uncertainty.
But looking more broadly, the potential impact of political risks on the safety of your employees and suppliers is not only financial but also reputational. This is because political risks can strike at the heart of your organization’s moral obligation to provide safe environments for the people it is responsible for.
Your organization might suffer economically, but we all know that the reputational damage can be irreparable if an organization does not live up to its moral obligations. Modern communications ensure a high level of transparency and global opinion that has to be taken seriously.
These challenges are not something you can mitigate with insurance, and there are several examples of companies that have never fully recovered after a reputational setback.
The complexity of risks is growing as our world is even more interconnected and transparent, which is why integrating the way you evaluate risks and mitigation is more important than ever.