Inside the Strategy Room 230. How boards can tackle geopolitical risk
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Dec 19, 2024 Dominic Barton, board chair for Rio Tinto and former Canadian ambassador to China, joins Frithjof Lund, a McKinsey senior partner in corporate governance, and Ziad Haider, a specialist in geopolitical risk. They dive into how boards can navigate complex geopolitical landscapes. The conversation highlights the importance of proactive risk management, creating dedicated units for geopolitical insights, and the evolving roles of non-executive directors. They stress the need for structured frameworks and transparency in addressing uncertainties while aligning board and executive strategies.
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Increased Board Complexity
- Board directors face increasing complexity due to various factors, including stakeholder demands and market forces.
- This has led to a significant rise in time spent on board work, with an average increase of five days per year.
Time Management for Board Members
- Board members should be prepared for increased time commitments, especially during crises.
- Executives can benefit from holding one board role, but two might be excessive due to time constraints.
Geopolitical Risk Awareness
- Less than half of surveyed board directors currently prioritize geopolitical and macroeconomic risks on their agendas.
- This is surprising given the increasing importance of these issues in the current global landscape.