by Dr. David A. Glancy
The ever-evolving state of global politics ensures that unexpected political events will inevitably occur. As this information is absorbed by market participants, associated risks are reflected in changes in the value of affected assets. Incorporating geopolitical risk analysis into a well-developed risk management program can enhance portfolio risk mitigation through effective analysis and planning.
Dr. David Glancy provides a concise framework and checklists to build institutional capacity to analyze and manage geopolitical risk, as well as geopolitical “opportunities”. Among other things, the paper covers the process for identification of the geopolitical risks that could affect the investments, forecasts or the assessment of likely outcomes (and parameters for losses), recommendations for mitigation of downside risks (and the development of strategies to benefit from geopolitical opportunities), and monitoring of the situation to identify changes in the geopolitical environment.