Geopolitics, Cybersecurity, and Preparedness

The crisis and risk management world in 2024 is as busy as it has ever been, with geopolitics taking centre stage. In recent years, geopolitical events have given rise to a steady stream of business risk scenarios, with headline stories such as the US-China trade war (ongoing since 2018), the COVID-19 pandemic, the 2022 Russian invasion of Ukraine and the subsequent sanctions against Russia, and most recently, the Israel-Gaza conflict. “Geopolitical risk has been on the minds of leaders we interact with,” a senior economic and political risk advisor told our researcher; “its importance has continued to increase year on year… this has translated into increasing appetite into insights and understanding crises.”

The Russo-Ukrainian war has caused profound disruptions to the global economy, and C-Suite executives and their advisors have scrambled to mitigate the financial impacts of the war as well as its consequent sanctions on their businesses. Many advisors we interviewed spoke about Fortune 500 companies’ shift in activities, as they move to either completely pull out of Russia or significantly rein in company interests.

In a similar vein, but to a much lesser extent, commentators have also highlighted dwindling foreign investments in China: “companies are moving away from China and Russia,” said one source, “and realigning with countries with stronger relationships and lower local geopolitical risks.”

These investments did not disappear into thin air, though: market commentators have noticed heightened interest in Central Asian jurisdictions such as Kazakhstan and Uzbekistan, spurring an increased demand for country risk, market entry and due diligence projects.

With the escalating sanctions and tariffs on Russia and China, crisis and risk advisors have also seen a surge in demand for sanctions-related due diligence mandates, and more complex projects to identify sanctioned entities and individuals. “Whereas clients had previously relied on screening products” for diligence work, “that’s not enough anymore” says a due diligence expert. “We’ve been working on a lot of projects identifying indirect links to sanctioned entities or individuals.”

Businesses are increasingly conscious of the public perception of their stances on major geopolitical events, and demand for crisis PR and communications advice continues to rise as a result “We are helping companies understand reputational effect on their positioning around geopolitical events,” a senior executive in a consulting firm told us, adding that “companies need to tread a careful line about the optics of who they do business with.” Another source reported that “we are seeing recognition from executives that communications is critical and it’s important and paramount to bring in communication strategies earlier in the crisis preparation and response process.”

Cybersecurity is another major trend highlighted in our Crisis & Risk Management 2024 research. The UK’s Information Commission Office reports a 33% year-on-year increase in reported data security incidents in Q4 2023. A cyber expert remarked that, “whereas ransom attacks were big in 2022, in 2023 you saw large IT process attacks with data crises.” One of the latest and most high profile examples of such an attack is Microsoft Azure’s recent major data breach caused by a phishing attack.

Sources also predict that the rise of artificial intelligence will lead to more cybersecurity incidents, a sentiment echoed by UK’s National Cyber Security Centre (NCSC)’s 2024 assessment. The assessment admonishes that AI will provide capability lifts for all types of threat actors: it will help skilled threat actors carry out impactful cyber attacks more effectively and significantly lower the barrier to entry for less skilled hackers to carry out “effective and scalable access operations.”

Artificial intelligence is also escalating misinformation and disinformation. A litigation partner at a high-profile US law firm told our researcher that, “in terms of future trends, AI has the ability to increase the speed that information or disinformation can be produced, so it could have a huge effect on controversies and crisis related situations.”

The rise of AI combined with the upcoming global election year has made misinformation and disinformation a particularly dangerous threat. “Election meddling, from CPU hacking to misinformation and disinformation, is not just a trend in the US, but a global trend that’s very heightened during election seasons,” a senior cybersecurity expert in a global consulting firm observed. A notable example is Steven Kramer’s recently indictment for using AI to impersonate President Biden to suppress votes in the Democratic Primary. The NCSC's prediction about AI lowering barriers to entry proved accurate when Paul Carpenter, a street magician from New Orleans, implemented Kramer’s AI impersonation scheme in just five to ten minutes, reaching over 20,000 voters.

Market sources across all verticals of the crisis and risk management market have noted the increased demand for advice on crisis preparedness in this turbulent market.

A senior economic and political risk advisor said they had participated in “a lot more table-top exercises, where plans and potential scenarios are being thought through.”

On cybersecurity preparedness, another commentator remarked, “we’ve been seeing a noticeable trend in allocation of funds across the board in preparing for an event and what to do in those situations. There is a continued revolution in end-point management and introducing AI for monitoring, There has been a lot of continued investment in this area.”

Business intelligence and due diligence advisors have also seen greater demand for scenario planning and outcome projections in preparation for investments.

Geopolitical risk and cybersecurity are two of the most significant trends highlighted in our research for the Crisis & Risk Management 2024 guide. But the traditional types of mandates in this market, such as ESG, regulatory risks, fraud and misconduct, remain strong this year, too.

In an increasingly complex and unpredictable world, businesses in 2024 are becoming more cautious, risk-averse, and proactively prepared for crises. Correspondingly, risk and crisis advisors are racing to develop more nuanced and sophisticated practices to keep up with client demands.