The level of geo-political and economic uncertainty is as great as at any time since the end of the Second World War. And this situation is unlikely to change any time soon. In addition to the armed conflicts in Ukraine and the Middle East, as Polish PM Donald Tusk rightly identified we face an active Russian hybrid warfare campaign in Europe and terrorist and cyber threats are very real. Politics too are increasingly uncertain. Dissatisfaction amongst voters with their governments and established political parties has risen dramatically across most of the democratic world. There is growing support for parties that offer apparently simple solutions to complex problems. Economically too, inflation is proving to be tougher to control than expected. Many governments are struggling with high debt levels. And the transition to green energy is a harder sell against a background of high energy prices and people frustrated with the lack of economic growth in many countries.
None of this is the best backdrop for most businesses as we start 2025. The business environment is anything but stable and predictable and we wait to see the potential impact of a new US tariff regime. This does not mean that the prospects for business this year are gloomy. Some sectors like defence and green energy are booming. But thinking strategically will be critically important. What does that mean in practice? Obviously that depends on the situation in a specific business or sector. But my starting point would be to focus on risk assessment and scenario-based planning. Conducting regular risk assessments not only helps to identify potential threats and vulnerabilities but also may alert businesses to new opportunities.
Scenario-based planning sounds complex but need not be. And it is important to prepare for the impact of events such as a political or economic crisis, regulatory changes or supply chain disruption. Also high on my list, as I have stressed before, is building strategic partnerships and alliances to help navigate political and economic complexities. Other critical areas include considering strategies to increase market, supplier and product diversification. Overreliance on one supplier or market can be disastrous, as many countries discovered in relation to Russian gas!
The key is to think ahead and plan. Once a crisis begins, it is already too late. Building a culture of flexibility of flexibility and quick response to challenges takes time. And if you need external advice and support, we at Verificators can help. I shall be writing more on this in the coming weeks.
Author: Robin Barnett – Strategy and Business Intelligence Adviser
