Changing world order

DR. CONCHITA L. MANABAT l NOVEMBER 9, 2022 l Business Mirror

“All great changes are preceded by chaos.”—Deepak Chopra

THE past months and those to come must be a long, agonizing period for most of global economic leaders including our own. Complications brought about by the pandemic, the Ukraine war, geo-political concerns, climate change, seeming untamed inflation, recession and more bring the world in the midst of chaos.

In a recent webinar (part of the Deloitte Global Board Program) featuring the topic, “Geopolitics: Company Challenges in a Fragmenting World,” Gen. David H. Petraeus, retired Director of the US Central Intelligence Agency (CIA), spoke about a shift he observed in the past decade. He cited the transition from a world where economics largely determined geopolitics to an era of renewed great power rivalries, where geopolitics is determining economics.

As a consequence, the corporate world is also constrained in many respects. He pointed out that companies should be sensitive to geopolitical risks and they should be set up to consider the changing world order. (Petraeus discussed other matters.)

In the same forum, David Miliband (president and CEO of the International Rescue Committee and former Foreign Secretary of the United Kingdom) referring to corporate boards, forwarded that a wide range of global risks—health risks, cyber risks, climate risks and the nuclear threat—are increasingly being added to the board agenda. He commented how the geopolitical order and the old approach to globalization are both challenged and how they are interacting with each other. He sees the globalization of risk (health, commodities, security, for example) and the nationalization of resilience—a kind of “anvil” on which boards are caught at the moment. He also pointed to a more united Europe as a consequence of the conflict in Ukraine and discussed the vital importance of global structures such as the United Nations.

One cannot help but discern how countries and the corporate world will navigate the turbulence in the landscape beset with many risks and likely scenarios to contend with. By now, most corporations must have completed their plans for the coming year and beyond. What could be their parameters in preparing their plans? Are all significant risks taken into account? What level of confidence can one attribute to the plans?

Uncertainty is a key term to keep in mind. Nobody can claim having control over the situation.

Que sera, sera?

*** Conchita L. Manabat is the president of the Development Center for Finance. A past president of the Financial Executives of the Philippines and past chairman of the International Association of Financial Executives Institutes, she serves as the chairman of the IAFEI Advisory Council. She is a member of the Consultative Advisory Groups of the International Auditing and Assurance Standards Board and the International Ethics Standards Board for Accountants.

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