AGR reflects APCO's understanding of the regional risks facing businesses and how these risks come together at a global level. It is intended as a baseline from which to develop strategies that navigate and mitigate these risks. This report looks at emerging trends for Q4 2023 and was published in September 2023. For more, visit https://apcoworldwide.com/radar

1. GEOPOLITICAL
APCO
RADAR
Q4 2023: THE GLOBAL OPERATING ENVIRONMENT

2. TABLE OF CONTENTS
Welcome to the APCO
Geopolitical Radar (AGR), an
overview of geopolitical risks
posed to global corporations in
critical operating regions.
AGR reflects our understanding of the
regional risks facing businesses and how
these risks come together at a global level.
It is intended as a baseline from which
to develop strategies that navigate and
mitigate these risks. This report looks at
emerging trends for Q4 2023 and was
published in September 2023.
The regional insights represent the best
thinking of APCO corporate advisory
practitioners. With more than 1,000 people
across more than 30 global locations, our
analysis draws on decades of experience
and insights serving corporations that
operate globally.
The final part of AGR features our
Geopolitical Conversation Risk Index,
which illustrates the attention global media
gives each risk and the degree to which
Fortune 500 companies are already acting
or are likely to take action.
HEADLINE GLOBAL RISKS
TOP-LINE TRENDS
Q4 SPOTLIGHT RISK: LOOKING AHEAD TO COP 28
REGIONAL INSIGHTS
Asia Pacific
China
South Asia
Middle East & North Africa
Sub-Saharan Africa
Russia & Eastern Europe
Western Europe
Latin America & Caribbean
United States & Canada
MULTILATERAL INSTITUTIONS & FORUMS
GEOPOLITICAL RISK INDEX
UPCOMING GLOBAL EVENTS
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3. HEADLINE GLOBAL RISKS
Acute Transitory Enduring
China
Deflation highlights broader economic
challenges.
Real estate policy fails to improve confidence.
A fragile U.S.-China détente continues.
Asia Pacific
China reaches out to ASEAN partners
as tensions flair.
Trilateral Summit strengthens U.S.-
Japan-South Korea ties in pursuit of
regional security.
Thailand and Cambodia elections
usher in uncertainty.
Indonesia and Singapore provide litmus
test for current regimes, as protectionist
agendas remain entrenched.
United States & Canada
Growing public concern around climate
change-related extreme weather is
spawning new regulation.
Anti-China sentiment is an
enduring bipartisan cause and U.S.
allies close ranks.
Partisan politics and corrosive culture
wars are undermining U.S. businesses.
U.S. congressional stalemate stalls
legislation and procurements and
threatens shutdown.
Western Europe
The Russia-Ukraine war continues to
exacerbate economic uncertainty in
supply chains and energy markets.
European governments consider
outbound investment restrictions amid
de-risking push.
Europe moves ahead on clean
technologies as net zero faces headwinds.
Proliferation of stakeholders driving
global initiatives on AI adds to
business uncertainty.
Middle East & North Africa
Egypt's natural gas production lags,
creating energy shortages.
Israel’s economy and social cohesion are
threatened by judicial reform controversy.
Lebanon-Israel border tensions rise
amidst escalation.
Turkey intensifies diplomatic and
economic rapprochement with
Middle Eastern neighbors.
Sub-Saharan Africa
West African bloc is divided amid Niger
coup response.
Inflation, hunger and poverty spur
demonstrations across the continent.
African nations look to reshape raw
material export controls.
Uganda faces economic pressure from
anti-LGBTQ law.
Russia & Eastern Europe
Upcoming elections increase uncertainty and
create more instability for the war in Ukraine.
Restrictive economic policies and scrutiny
on Russian market presence are increasing
the costs of operating in Russia.
A reconfiguration of geopolitical
alliances and a contest for non-aligned
countries are underway.
Latin America & Caribbean
Political polarization continues to
intensify and become entrenched in
Latin America.
Led by Brazil, Latin American countries
are collaborating and owning their
climate-change agendas.
The sources of investment in Latin
America are diversifying.
Latin American businesses are playing an
increasingly important role in the global
technology industry.
South Asia
India navigates geopolitics to expand
influence and attract foreign investment.
Pakistan's crisis persists despite IMF aid.
Sri Lanka aims for recovery after economic
crisis and IMF support.
Bangladesh feels U.S. heat before
2024 elections.
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4. TOP-LINE TRENDS
Upcoming elections in 2024 are
set to reshape the international
policy arena with wide-ranging
implications for businesses.
Elections in the European Union and the
United States will be potentially pivotal
for the Ukraine conflict, with Kyiv and
Moscow watching closely but with very
different interests.
In Latin America, entrenched
polarization could result in more
political violence ahead of five national
general elections in 2024.
In South Asia, the government of
India is slow walking reforms that
could impact business ahead of the
May 2024 election.
Flare-ups around Taiwan’s elections in
January 2024 could undermine vital
trade routes in the South China Sea.
Climate policy is increasingly
prioritized by national governments
and businesses, while north-south
tensions remain ahead of key
climate convenings.
The European Commission continues to
lead in developing climate legislation,
but some member states are resisting
calls to further advance the climate
agenda ahead of domestic elections.
Europe’s net zero initiatives also face
headwinds as business coalitions seek
to remove regulatory burdens.
Latin American countries are becoming
more proactive in responding to climate
change. In Brazil, President Lula recently
convened South American and other
countries at the Amazon Summit,
and we expect Lula to use COP 28 to
demonstrate the progress Latin America
has made to support his bid for Brazil to
host COP 30.
The stakes are high in MENA and Asia,
which are home to half the world’s
population and produce more than
half of annual global emissions. With
COP28 and G20 being hosted between
MENA and South Asia, leaders see an
opportunity to demonstrate their region’s
contributions to fighting climate change.
“Main Street” economic
issues continue to dominate
political discourse.
The war in Ukraine continues to have
ripple effects on energy and food
prices globally. Inflation in the UK,
for example, is predicted to remain
high until 2025 and energy volatility is
expected this winter despite progress
on source diversification.
The high cost of fuel in Nigeria and
Kenya, and across many emerging
markets, is contributing to a rise in cost
of living. This is being compounded by a
strong U.S. dollar. A state of emergency
has been declared in Nigeria and the
government has unveiled a plan to
address living costs. In Kenya, where
leadership has promised to reduce
poverty, some demonstrations over the
rising cost of fuel have turned violent.
Weakening exports, high youth
unemployment, and a faltering property
market in China are contributing to
short-term deflation and lackluster
consumption.
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5. In 2023 the impacts of climate change have intensified: from the hottest summer in the northern
hemisphere on record, to natural disasters to mass displacement of people. The El Niño effect has
led to more erratic and unpredictable weather patterns, which has in turn aggravated socio-political
tensions around the globe and destabilized countries and regions, particularly in the global south.
For governments, the Conference of the Parties to the UN Framework Convention on Climate
Change, known as COP 28 in 2023, is an opportunity to reaffirm their greenhouse gases mitigation
commitments and to breathe new life into the 2015 Paris Agreement. It also provides a global
platform for governments to advance their adaptation plans and commitments to climate finance.
Pressure is building on developed countries to increase funding to a scale that addresses the
worsening effects of climate change and to deliver on their collective goal of mobilizing $100
billion per year by 2025 for climate action in developing countries.
The legitimacy of this year’s COP is questioned by some. It will be hosted by the UAE, a country that
has relied heavily on fossil fuel industries in the past few decades but is now committing significant
resources to cleaner alternatives. We expect COP 28 will also bring new tension between some
nations pushing for robust climate measures, and leading economies, led by China and India,
prioritizing their energy security and economic development.
Three things business should watch ahead of COP 28:
LOOKING AHEAD TO COP 28
Q4 SPOTLIGHT RISK:
Offset evolution
The vast disruption in the carbon markets
due to concerns over quality will lead
companies that depend on offsets for
their decarbonization and net zero goals
to seek out alternatives as the market
matures and evolves.
Small modular nuclear companies like
Oklo will soon emerge as truly viable
options for companies looking for
dependable, carbon-free baseload
energy. Companies looking to secure
offtake should pursue early-stage
investments in the space.
Companies that are dependent on
shipping will soon be offered “green”
shipping options on defined routes
known as “green shipping corridors”
with defined carriers that have
purchased green methanol powered
ships. This will allow companies to
address their scope 3 emissions — an
increasing focus of activist regulators
and investors — with costs for these
fuels being passed along to customers,
consumers and business owners.
1. 2. 3.
Nuclear as a dependable
energy source
Alternative fuels coming
to shipping routes
TREVOR NEILSON
Senior Director and IAC
Member at APCO Worldwide
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6. Acute Transitory Enduring
HEADLINE RISKS IMPACT TO BUSINESSES RISK HORIZON
China reaches out
to ASEAN partners
as tensions flair.
• Chinese Foreign Minister Wang Yi conducted his first official visit to Singapore,
Malaysia, and Cambodia in August to strengthen China’s ties in the region.
• The visit provided Singapore and Malaysia an opportunity to reiterate ASEAN’s
importance as a regional mechanism able to serve as a regional force that
balances U.S. and China interests, while Cambodia reaffirmed its commitment
to China.
• The visit comes as the region reacts to Tokyo’s release of radioactive
wastewater from the Fukushima nuclear plant. China has suspended imports of
Japanese seafood products while South Korea’s Prime Minister urged Japan to
lead with transparency during the 30-year discharge process.
• In the short term, businesses are
likely to benefit from emboldened
regional actors unwilling to succumb
to pressure from China and the U.S.
Longer-term, tit-for-tat sanctions and
other retribution by regional powers
will create unhelpful friction for intra-
regional trade and investment.
Trilateral Summit
strengthens U.S.-
Japan-South Korea
ties in pursuit of
regional security.
• The “Spirit of Camp David” statement coming out of the trilateral summit
affirmed the bloc’s shared commitment to deterring North Korea’s nuclear
build up and countering aggressive actors through real-time shared missile
warning data and the establishment of a Korea-U.S. Nuclear Consultative
Group, among other security efforts.
• The establishment of annual trilateral military exercises, supply-chain
security initiatives, critical technology protections, and other forms of shared
development is a sign of the momentum behind building the trilateral
relationship.
• Closer military ties between Japan
and Korea may strengthen regional
security and make room for better
trade relations. However long-
existing historical tension and current
competition in high-tech industries
may limit the potential for large scale
changes to the trade relationship.
Thailand and
Cambodia
elections usher in
uncertainty.
• Thailand’s Move Forward Party (MFP) became the main opposition after PM
candidate Pita failed to establish a new government. Former partner Pheu Thai
left to form an 11-party coalition, including military-backed parties, with Srettha
Thavisin becoming Thailand’s 30th Prime Minister.
• Cambodia's recent elections saw Cambodia People’s Party (CPP) win 120 of 125
seats. Ex-PM Hun Sen's Party nominated his eldest child, Hun Manet, as the new
PM. The election marks a shift from "old guards" to their next generation relatives.
• The new government in Thailand
brings clarity and stability to
governance after a three-month
deadlock. Pheu Thai's open economic
agenda will boost business confidence,
but political tension may persist due to
public dissatisfaction.
• In Cambodia, businesses can expect
more of the same as Hun Sen will
retain power, but tensions between the
new and old guard should ease.
Indonesia and
Singapore provide
litmus test for
current regimes,
as protectionist
agendas remain
entrenched.
• Indonesia's 2024 elections raise concerns about the continuation of
protectionist policies established by former President Jokowi. Like India,
Indonesia is creating friction for importers, demonstrated by recent laptop and
server import restrictions. The new president is likely to maintain resistance to
WTO's customs duties moratorium, prioritizing customs revenues.
• The election of former deputy prime minister Tharman Shanmugaratnam as
Singapore’s new president demonstrates the enduring strength of the People’s
Action Party and signals ongoing stability in the island state.
• As businesses diversify and hedge
against China, India and Southeast Asia
are emerging as alternatives. However,
rising protectionism in the APAC
region poses risks for businesses.
ASIA PACIFIC
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7. Acute Transitory Enduring
CHINA
HEADLINE RISKS IMPACT TO BUSINESSES RISK HORIZON
Deflation
highlights
broader economic
challenges.
• Although CPI data for June and July showed China slipping into deflation,
these figures were skewed by falling global oil prices and a post-pandemic
supply overcorrection by Chinese pork producers.
• Core CPI (which excludes food and energy prices) increased in the third
quarter, suggesting this deflationary period will be temporary, with food and
oil prices set to edge upward into 2024. However, weakening exports, high
youth unemployment, and a faltering property market all threaten to delay
China’s emergence from this deflationary period.
• While the risk of China falling into a
deflationary spiral is highly unlikely,
this temporary bout of deflation is still
indicative of endemic overcapacity and
weak demand across many industrial
sectors. Shrinking corporate margins
are a further drag on the economy’s
return to robust growth.
Real estate policy
fails to improve
confidence.
• Home values in China are declining across most cities. In response the
government has put in place a series of interventions including lowering
mortgage rates and rolling back some restrictions on home purchases. However,
these policies have had little impact so far. The government is carefully assessing
the pros and cons of greater intervention but is hesitant to intervene too
forcefully as weaning the economy off real estate remains a priority.
• As most Chinese household wealth is
held in real estate, China’s property
market decline will continue to
dampen consumer demand.
Combined with perceived weakness
across other parts of the economy,
this is creating a wait-and-see
approach on home purchases and
other investment decisions.
A fragile U.S.-
China détente
continues.
• A string of high-level visits by U.S. officials, including Secretary of State
Anthony Blinken, Treasury Secretary Janet Yellen and Commerce Secretary
Gina Raimondo have laid the groundwork for stabilizing U.S.-China relations.
The reestablishment of some working-level dialogues has been particularly
welcomed by the business community.
• Despite these meetings, relations are still fraught and there remains limited
room for significant diplomatic breakthroughs. President Xi Jinping did not
attend the G20 leaders’ summit in India and has yet to confirm his participation
in the November APEC summit in San Francisco. A Biden-Xi meeting in San
Francisco will be an important bellwether for the relationship a year ahead of
the U.S. presidential election.
• Political signaling about the
direction of the U.S.-China economic
relationship is critical for multinational
businesses as they seek assurances on
investment and operational decisions
in China. Despite strong positive
momentum, an evergreen risk is that
U.S.-China détente measures are
derailed either by some unforeseen
incident (such as the alleged spy
balloon incident) or by domestic
political pressures.
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8. Acute Transitory Enduring
SOUTH ASIA
HEADLINE RISKS IMPACT TO BUSINESSES RISK HORIZON
India navigates
geopolitics to
expand influence
and attract foreign
investment.
• As the host of the G20 and the Shanghai Cooperation Organization (SCO) in
2023, India plans to focus on challenges faced by the Global South, especially
in the wake of the Russia-Ukraine war. India will continue to seek ways to
enhance its diplomatic leverage and pursue foreign investment, especially in
high-technology fields such as electronics and semi-conductors.
• Domestically, India is enacting reform policies and legislation to attract
elements of global supply chains as they look to diversify. But the election
timetable in India will impede major policy changes, which may not come until
the next government is in place in May 2024.
• While doing business in India is
expected to become easier, little will
change in the immediate future and
some regulatory hurdles, tariffs, and
import restrictions will persist.
Pakistan's crisis
persists despite
IMF aid.
• In August 2023 an interim government assumed power in Pakistan, following
a contentious delay in the electoral process. Elections are now tentatively
scheduled for early in 2024.
• The detention of Imran Khan and other opposition figures in August has
deepened political instability. This exacerbates an already severe economic
situation marked by currency devaluation, rampant inflation, and sluggish
economic expansion.
• The business environment in Pakistan
will continue to be challenging due
to rule of law uncertainties, multiple
import barriers, and restrictions on
transferring funds overseas. These
issues persist despite a recent influx
of capital facilitated by the IMF
agreement.
Sri Lanka aims
for recovery after
economic crisis
and IMF support.
• Recent financial aid from the IMF has allowed Sri Lanka to embark on debt
restructuring and initiate economic reforms. However, food insecurity is a
persistent problem in the country, especially due to an approximately 30%
increase in food prices since the start of the war in Ukraine.
• Improved ties with India, highlighted by the Sri Lankan president's latest visit to
New Delhi, have enabled Sri Lanka to negotiate debt restructuring agreements
with major creditor countries that are represented in the Paris Club.
• The more stable political environment
means Sri Lanka’s tourism sector is
set to recover, which will provide a
significant boost for its economy in the
longer-term.
Bangladesh feels
U.S. heat before
2024 elections.
• The incumbent Awami League government in Bangladesh faces scrutiny in
the West for alleged human rights violations and democratic backsliding. U.S.
sanctions continue to target the Rapid Action Battalion (RAB), Bangladesh's
paramilitary unit, for its alleged involvement in human rights abuses.
• While relations with the U.S. are strained, India's support could offer a pathway
for renewed dialogue, particularly as China seeks to expand its role in the
subcontinent.
• Although immediate economic
challenges like dwindling foreign
exchange reserves and a liquidity
crunch are evident, Bangladesh's
long-term growth prospects remain
favorable, contingent on its effective
management of current headwinds.
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9. MIDDLE EAST & NORTH AFRICA
Acute Transitory Enduring
HEADLINE RISKS IMPACT TO BUSINESSES RISK HORIZON
Egypt's natural
gas production
lags, creating
energy shortages.
• Egypt's natural gas production lagged considerably in the first five months of
2023, casting doubt on its ambition to become an energy security hub.
• The massive Zohr gas field, accounting for 40% of Egypt’s gas production, has
suffered water infiltration issues, impacting its output. Power shortages, amplified
by a heatwave, raise questions about energy supply stability and rationing.
• Businesses can anticipate a thin project
pipeline and depletion rates in energy-
related fields. If these issues persist,
concerns over Egypt’s energy security
could spur domestic unrest.
Israel’s economy
and social
cohesion are
threatened by
judicial reform
controversy.
• Israel is facing reduced foreign investment and a weakened currency
(declining 12% in the past year), as a result of political and societal
tensions surrounding the government's plan to weaken the judiciary. The
Supreme Court’s potential overturning of an existing law could result in an
unprecedented constitutional crisis.
• The technology sector, a primary growth engine, faces disruption, with startups
registering overseas and tech fundraising in decline. Israel’s credit rating also
risks a downgrade.
• Uncertainty continues among investors
amidst the nearly yearlong protests and
unrest. Foreign investment in Israeli
technology companies has been strong
in recent years, but prolonged civil
discord and perceptions of diminished
checks and balances in governance
could derail investor confidence.
Lebanon-Israel
border tensions
rise amidst
escalation.
• The Israel-Lebanon border faces heightened tension with recent provocations
by the Iranian-backed Hezbollah. Hezbollah has raised bellicose rhetoric
against Israel in recent months, while Israel reinforced its military deployments.
• Israeli defense officials caution that Hezbollah perceptions of current internal
Israeli rifts could encourage more aggressive posturing, triggering a broader
conflict.
• A future Israel-Hezbollah military confrontation could plausibly escalate and
ensnare regional and global actors, including Syria, Iran, Russia and the U.S.
• A miscalculation on either side that
leads to a wider regional confrontation
could disrupt commercial and freight
traffic through ports of entry in the
region and deter foreign investment.
Prolonged tension could also
disincentivize regional connectivity
ventures in the Eastern Mediterranean.
Turkey intensifies
diplomatic
and economic
rapprochement
with Middle
Eastern neighbors.
• Amid acute economic challenges and domestic pressure, Turkey has restored
full relations and pursued new trade opportunities with Middle Eastern peers
despite conflicts over the past decade, including Egypt, KSA, UAE and Israel.
• Turkey is also pursuing rapprochement with Syria under Russian and Iranian
mediation. Talks encompass security enhancement, diplomatic normalization,
counterterrorism efforts and refugee repatriation.
• Turkey’s improved relations with
its neighbors enhance regional
stability and offer the possibility of
unprecedented interconnectivity and
cooperation. Businesses can anticipate
increased partnership opportunities in
areas such as energy, transportation,
construction and defense.
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10. Acute Transitory Enduring
SUB-SAHARAN AFRICA
HEADLINE RISKS IMPACT TO BUSINESSES RISK HORIZON
West African
bloc is divided
amid Niger
coup response.
• Divisions persist among West African bloc members on how to respond to the coup
in Niger. Tensions are rising as the Economic Community of West African States
(ECOWAS) seeks intervention, while the African Union opposes troop deployment.
Burkina Faso and Mali juntas support the coup and would view military intervention
as a "declaration of war" on their states.
• France and ECOWAS worry that instability in the region could spur expanded Russian
influence. Meanwhile, the EU is planning sanctions against Niger Republic's junta.
• Niger’s precarious domestic situation
and tensions with neighbors pose a
risk to security and business certainty in
West Africa.
• Businesses should be aware of Russia’s
attempts to exert greater influence in West
Africa, especially as historical factors and
the diversity of opinion across the Sahel
region gives Russia some unique leverage.
Inflation, hunger
and poverty spur
demonstrations
across the
continent.
• Across the continent, countries are grappling with popular discontent over
inflation, often due to fuel subsidy cuts. In Nigeria, cost-of-living challenges led
President Bola Tinubu to declare a state of emergency and unveil a 500-billion-naira
(approximately US$ 635 million) plan to tackle living costs.
• Demonstrations in Kenya over higher energy taxes have turned violent, with several
deaths. Dissatisfaction over President William Ruto's unfulfilled poverty reduction
pledges are fueling protests led by opposition leader Raila Odinga.
• Businesses should be cognizant of the
central role local trade unions and other
professional organizations are playing in
many protest movements.
• Unresolved inflation and poverty
challenges could spur greater
mobilization for anti-government
protests. Prolonged demonstrations,
in turn, threaten the stability of
governments, harm the business climate
and discourage foreign investment.
African nations
look to reshape
raw material
export controls.
• Mineral-rich parts of Sub-Saharan Africa have become key sourcing hub for electric
vehicle inputs and renewable energy technologies that require copper, cobalt and
lithium and other raw materials.
• Central African Republic President Touadéra won an election with the support of
Russia’s Wagner Group mercenaries, in which extra fighters arrived ahead of the
referendum to provide security for the president. This support was reportedly in
exchange for trade concessions with minerals and timber industries.
• Increased demand for critical minerals in the Democratic Republic of the Congo,
Namibia, Zimbabwe and surrounding countries has led to concerns about
environmental degradation, human rights abuses and power struggles in the region.
• Businesses should be alert to the
environmental impact, labor ethics
concerns and political risks in these
resource-rich countries as sustainable
practices can conflict with mining and
production processes.
• The resources of these countries,
including uranium, are increasingly
being contested by growing Russian
and Chinese influence, with geopolitical
factors becoming increasingly important.
Uganda faces
economic
pressure from
anti-LGBTQ law.
• The 2023 Anti-Homosexuality Act both prohibits the promotion of homosexuality
and broadens the definition of the crime of homosexuality. This legal measure is
poised to stifle freedom of speech, expression and association, while also restricting
personal liberties, privacy and equal treatment.
• Similar anti-LGBTQ laws in the region had severe economic consequences. In
2019, Kenya reportedly experienced annual losses of $1.3 billion due to reduced
tourism, negative health impacts and decreased employment opportunities for
LGBTQ individuals.
• Economic instability looms as the World Bank has suspended lending to Uganda
in response to the anti-LGBTQ law. Western countries may also consider sanctions
against Uganda, which may exacerbate its ongoing debt crisis.
• Some Western multinationals, including
Google and Microsoft, have condemned
the legislation.
• The case demonstrates the conundrums
faced by Western businesses as they
assess their operations in jurisdictions
that run counter to their values and the
obligations they have to employees,
investors and home market human-
rights requirements.
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11. Acute Transitory Enduring
RUSSIA & EASTERN EUROPE
HEADLINE RISKS IMPACT TO BUSINESSES RISK HORIZON
Upcoming
elections increase
uncertainty and
create more
instability for the
war in Ukraine.
• Elections across the globe in 2024, including in the U.S., Europe and Russia,
will impact international support for Ukraine, as enthusiasm for financial and
military support for the war differs widely across political parties.
• Russian-backed entities are expected to interfere in Western elections with the
goal of eroding supports for Ukraine and anti-Russian sanctions.
• In Ukraine, uncertainty surrounding financial and military aid will disrupt
Ukrainian battlefield outcomes and the status of Russian occupied territories.
• The process and outcome of global
elections, and the policies that helped
specific politicians win, will intensify
pressure on businesses to take very
clear stances on doing business in
Russia and Ukraine.
• Businesses will increasingly be
required to make operational and
financial decisions related to the
reconstruction of Ukraine, and
the recalibration of business and
investment in the region.
Restrictive
economic policies
and scrutiny on
Russian market
presence are
increasing the
costs of operating
in Russia.
• Russia has increased legal and procedural hurdles for companies trying to
leave the market, making it nearly impossible for international businesses
to extract value from the sale of their Russian assets and slowing complex
transactions.
• The Russian government has begun expropriating foreign assets in all sectors,
including two energy companies and two consumer-facing brands.
• A naming and shaming initiative by the Ukrainian government is labeling
companies that remain in Russia “International Sponsors of War.”
• Businesses that have chosen to remain
in Russia could face renewed interest
from Western governments and
consumers related to their operations,
with questions raised about how their
tax revenues may be contributing to
the Russian war effort.
• Businesses from non-Western
countries, including China and India,
will continue to see opportunities and
risks from their operations in Russia.
A reconfiguration
of geopolitical
alliances and a
contest for non-
aligned countries
are underway.
• Ukrainian President Zelensky’s overtures to Saudi Arabia and the Middle East
and Russian overtures to South Africa and the global south provide added
complexity and potential uncertainty to the peacemaking process and Western
policy responses.
• The impact of Russia's oil production and prices, including India's leveraged
oil deals with Russia, will be significant factors in Russia's economic situation
and ability to invest in the conflict.
• Similarly, Turkey remains a significant arbiter between Russia and Ukraine and
oversees the grain deal, which has significant ripple effects on global supply
chains and political alliances.
• China's support for enlargement of the BRICS group and its apparent pullback
from the G20 indicates its desire to forge geopolitical alliances that counter G7
influence and align with the interests of Russia.
• The growing voices of third parties
in the Russo-Ukrainian war increases
uncertainty surrounding the
peacemaking process. At the same
time, the stability of global economic
alliances and supply chains will be
put to the test by policy responses to
geopolitical and military outcomes in
Ukraine.
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12. Acute Transitory Enduring
WESTERN EUROPE
HEADLINE RISKS IMPACT TO BUSINESSES RISK HORIZON
The Russia-Ukraine
war continues
to exacerbate
economic
uncertainty in
supply chains and
energy markets.
• The EU is increasingly focused on measures aimed at countering sanctions
circumvention via Russian-aligned companies in third countries.
• The war continues to create domestic economic and energy concerns, with inflation
in the U.K. predicted to remain high until 2025 and energy volatility expected this
winter despite progress on source diversification.
• While inflation rates within the Eurozone are steadily falling, high consumer prices,
a strong dollar, and high interest rates will continue to put pressure on economies
and elected leaders.
• The trajectory of the Ukraine conflict will
impact policy and supply-chain decision-
making. Businesses should continue to
keep abreast of supply-chain mandates
and sanctions compliance, as well as
the growing number of private-sector
Ukrainian reconstruction initiatives.
European
governments
consider
outbound
investment
restrictions amid
de-risking push.
• The U.K. government is considering surveying companies’ outbound investments
and imposing restrictions for key technologies, following a U.S. executive order to
begin screening outbound investment in certain sectors. The EU is also preparing a
proposal, expected by the end of 2023.
• There is increased pressure on EU member states to remove “high risk”
telecommunications equipment from domestic networks.
• The German government proposed new measures to restrict foreign investment
in critical sectors following the release of its long-awaited China strategy in July
2023, and ministers in Rome signaled they may increase the use of their so-called
“Golden Power” to screen foreign investments.
• Geopolitical and regulatory pressure is
translating into increased reputational
and operational risks as businesses need
to devote more resources to justifying
and reporting on supply chains and
investment activities.
• The scope of any future legislation on
outbound investments is not yet certain
and could expand over time.
Europe moves
ahead on clean
technologies as
net zero faces
headwinds.
• Concerns over the U.S. Inflation Reduction Act are becoming more muted across
Europe following the revision of EU state aid rules allowing national governments
to match subsidies for European companies with what they would receive from the
U.S. However, concerns remain over Brussels’ approach, which may favor larger
member states and their companies over smaller members and SMEs.
• At the same time, Europe’s green agenda – hitherto a top EU priority – faces
increasing headwinds in the lead-up to national elections in the Netherlands
and Poland later in 2023 and the European Parliament elections in 2024.
Similar challenges exist in the U.K. ahead of a potential general election
in 2024, as the government’s net zero commitments are complicated by
persistent cost-of-living concerns.
• Environmental and climate considerations
will remain a key point of debate at a time
of extreme continental climate events
and record heat in Europe.
• However, the momentum for climate
legislation could slow as coalitions
that oppose regulatory constraints that
hamper competitiveness grow. This
may have implications for companies
as governments shift focus away from
incentivizing lower-carbon technologies.
Proliferation of
stakeholders
driving global
initiatives on AI
adds to business
uncertainty.
• The U.K. will host a Global Summit on AI Safety in November 2023, bringing “like-
minded countries” together with key tech companies and researchers to address AI
risks. This will coincide with parallel efforts at the G7 level.
• The EU hopes to develop an international code of conduct on AI together with the
United States, while Italy is laying the groundwork for AI to be a key theme of its G7
Presidency in 2024.
• Technology companies have an
opportunity engage with policymakers
to conceive of contribute to regulatory
initiatives that will balance concerns
around safety and security with the
opportunity to harness innovation for
positive societal outcomes.
• As companies beyond the technology
industry integrate generative and other AI
technologies into their work processes, it
will be vital to keep abreast of emerging
regulation, litigation, and standards at the
national and multilateral levels.
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13. Acute Transitory Enduring
LATIN AMERICA & CARIBBEAN
HEADLINE RISKS IMPACT TO BUSINESSES RISK HORIZON
Political
polarization
continues
to intensify
and become
entrenched in
Latin America.
• Political polarization has become entrenched across Latin America, and there is
an increase in political violence as leaders try to gain or remain in power. While
there has been backlash from civil society and some government institutions,
countries including Ecuador, El Salvador, Nicaragua, Peru and Venezuela
continue facing cases of political pressure, forceful removal, incarceration and
even assassination of opposition figures.
• In 2024 there will be five general elections in Latin America, including in
Mexico, and heightened polarization could cause ongoing political unrest and
increased government instability.
• The business climate could deteriorate
as political instability can lead to
economic fluctuations, plummeting
foreign investment, and lack of trust in
government and official institutions.
• In general, global businesses
should track local political dynamics
and risks, while avoiding direct
political engagement.
Led by Brazil,
Latin American
countries are
collaborating
and owning
their climate-
change agendas.
• The Amazon Summit, where South American leaders convened in Brazil at the
beginning of August, marked a significant shift in Latin America's approach
to climate change. It resulted in a call to address environmental crimes and
human rights violation against the Indigenous community and strengthened
the role of the Amazon Cooperation Treaty Organization (ACTO), the only
international body that monitors the Amazon region.
• The summit was a Brazilian-led initiative, as the country aspires to host the 2025
COP 30 and position itself as the leader among Latin American governments
looking to collaborate with global stakeholders on climate action.
• Climate-change negotiations may
impact businesses in the region, with
tighter environmental regulation and
enforcement a likely outcome.
• Businesses should tap into green
investments and new market
opportunities for green technologies
and services as regional governments
implement and invest in bigger and
more ambitious sustainability projects.
The sources of
investment in
Latin America are
diversifying.
• According to the Economic Commission for Latin America and the Caribbean
(ECLAC), foreign direct investment in Latin America and the Caribbean grew
by 51% between 2021 and 2022.
• Beyond China and the United States, there is increasing interest from MENA,
Europe, and Southeast Asia in investing in Latin America.
• Increasing foreign investment could diversify the region's industrial footprint
in the short and long term. It also demonstrates that Latin America's alliances
are expanding as regional leaders take ownership of engaging with others and
capitalizing on the growing interest from non-Western powers.
• The influx of multinational investment
is stimulating economic growth
and also fostering new types of
competition against a backdrop of
shifting political dynamics, economic
reforms and development agendas.
Latin American
businesses
are playing an
increasingly
important role
in the global
technology
industry.
• Latin American countries, including Argentina, Brazil, Chile and Colombia
are playing an increasingly important role in the global tech sector and in
spurring digital innovation in mining resources, workforce development and
data housing.
• Some regional governments are
open to private sector engagement in
support of their technology sectors and
are encouraging business engagement
to foster market-friendly regulatory and
investment regimes.
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14. Acute Transitory Enduring
UNITED STATES & CANADA
HEADLINE RISKS IMPACT TO BUSINESSES RISK HORIZON
Growing public
concern around
climate change-
related extreme
weather is
spawning new
regulation.
• The impacts of unprecedented wildfires in Canada and Hawaii, scorching
heatwaves in the U.S. Midwest and South, unprecedented flash floods in New
England, and destructive hurricanes along the Atlantic and Gulf coasts represent a
demonstrable threat to North American citizens, infrastructure and economies.
• Given the increasingly visible impacts of climate-related events, the state of
California — a legislative precedent-setter — is considering a bill requiring all
companies with business exceeding $1 billion in the state to report their total
carbon emissions starting in 2026. This data would be publicly available.
• A mandate to report emissions
by California will empower
environmentalists to “name and shame”
companies with irresponsibly high
emissions. Other states will likely follow
suit, increasing pressure on companies
to decarbonize.
• Climate and weather-related risks are
making some parts of the country
difficult to insure, intensifying headwinds
for investors in those jurisdictions.
Anti-China
sentiment is
an enduring
bipartisan cause
and U.S. allies
close ranks.
• Recent U.S. legislative efforts, such as Biden’s executive order curbing U.S.
investment in China in specific technology industries and the National Defense
Authorization Act’s proposed prohibition on Chinese purchases of U.S. agricultural
land, illustrate that opposition to China has become a bipartisan feature of the
American political landscape.
• Anti-China rhetoric has surged in Canada over allegations of Beijing’s interference
in its last two federal elections. Ottawa is considering countermeasures, which
could bring closer alignment with the U.S.
• Congress is expected to intensify
scrutiny of the U.S. business community’s
investments and involvement in China.
Individual states will also continue to
create regulatory hurdles for Chinese
companies, particularly in so-called
strategic industries and in government
procurement.
• Ahead of the 2024 presidential election,
the Biden Administration may also take
further regulatory actions aimed at
protecting national interests.
Partisan politics
and corrosive
culture wars are
undermining U.S.
businesses.
• Partisan politics, cultural wars and disrespect for established norms are
continuing to rewire the U.S. economy and affect the country’s international
standing, credibility and creditworthiness.
• The political temperature in the U.S. continues to rise, demonstrated by
indictments of former President Trump, the investigation of President Biden’s
son, Hunter Biden, and divisive legislation from partisan state governments.
• Businesses are increasingly becoming ensnared in divisive cultural politics
with core strengths of the U.S. economic system, including respect for rule of
law, science and individual liberty, being undermined by self-serving political
interests and disinformation.
• Businesses should be prepared for a
tumultuous presidential election cycle
that will provide plenty of uncertainty.
• Companies with a broad consumer
base will increasingly find themselves in
no-win situations that place them at the
intersection of competing stakeholder
interests on issues such ESG, diversity
and inclusion, climate action and cross
border investment.
U.S. congressional
stalemate stalls
legislation and
procurements
and threatens
shutdown.
• The U.S. Congress is struggling to pass even the most foundational legislation
needed for the government to function, with an increased prospect of a
government shutdown in the final quarter of 2023. This comes on the heels of a
narrow avoidance of a U.S. default in June, and would hold up bills affecting many
parts of the American economy and society.
• Outside of authorization-related legislation and funding the government,
Congress will have little time to accomplish other key priorities requiring
urgent attention.
• Companies that do business with
the U.S. government may see a
slowing of contracts due to partisan
gridlock in Congress.
• A government shutdown would
have ripple effects in the U.S. and
global economy and have a chilling
effect on business confidence at a
time when the U.S. may have only
just avoided a recession. 14
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15. Acute Transitory Enduring
MULTILATERAL INSTITUTIONS & FORUMS
HEADLINE RISKS IMPACT TO BUSINESSES RISK HORIZON
The effectiveness
of multilateral
organizations is
questioned as key
conflicts remain
unresolved.
• The mandate for multilateral institutions is to maintain global peace and
security. This mandate is being tested, as the Russia-Ukraine war continues, and
new threats to peace, security and democracy emerge in countries like Niger.
Member states are also more polarized and are prioritizing their own national
positions, which frequently clash with global development needs.
• Political paralysis has also hampered efforts to tackle major global crises including
food security, as votes at the U.N. have fallen along regional political lines.
• Peace, stability and security are
essential conditions for businesses
to grow and thrive over the long
term. The Russia-Ukraine conflict has
shown that businesses need to plan
and prepare for political instability,
but also proactively support peaceful
solutions. The complexity of modern
global threats means companies must
prioritize developing strategies to
respond to emerging conflict.
The world looks
to multilateral
organizations
to curb climate
change.
• The UN Secretary-General said the impact of climate change has accelerated from
an era of global warming to an era of “global boiling,” underscoring the urgency
to increase government and private sector accountability, with the U.N. especially
increasing pressure on both ahead of COP 28.
• The Climate Ambition Summit will take place during the high-level segment of the
U.N. General Assembly in September 2023 and will serve as a key moment for the
private sector to communicate its climate commitments.
• The association of COP 28 with the fossil fuel interests has also raised questions
about green-washing and called into question whether significant progress on
climate change is possible.
• The U.N. is concerned about the role of
the private sector in climate change, in
particular the oil, gas and finance sectors,
but more broadly about the lack of action,
including through many unaccountable
corporate net-zero commitments.
• Companies should review their
sustainability strategies and
commitments to global standards to
ensure they are meeting the goals they
have articulated for themselves.
New major
binding
agreements
relating to
technological
developments
will impact
industry globally.
• International legal frameworks are under development that will govern new
technologies, including AI. Negotiating parties are prioritizing agreements which
will be legally binding.
• These include the final negotiations of a convention addressing international
law enforcement cooperation on cybercrime, an 89-country trade agreement
covering the digital economy and the Council of Europe’s negotiation around
a Framework Convention on AI to ensure the technology aligns with existing
human rights, rule of law and democratic norms.
• The development process for each agreement is primarily led by politicians and
does not necessarily include expert and diverse perspectives, which structurally
impacts the strength and feasibility of new agreements.
• Private sector participation in
negotiations on international standards
for new technologies is crucial. It is
essential that businesses provide
technical and practical input to these
proposals by filling knowledge gaps and
advocating for relevant policies as these
negotiations head into their final stages.
Traditional
funding
mechanisms
struggle to
adapt to global
challenges.
• Multiple global crises — including COVID, the war in Ukraine and climate change
— have proven that traditional multilateral financing mechanisms are outdated.
From Barbados’ Prime Minister Mia Mottley’s call for reform, to the conversations
at the Summit for a New Global Financing Pact, stakeholders are pressuring
international financial institutions to reform and re-evaluate how they address
global challenges.
• As the impact of climate change grows, so do calls for reform of adaptation
financing by international financial institutions, especially to support developing
nations that bear the brunt of the consequences of climate change.
• With private capital being one of the best
ways to meet the financial requirements
of the ongoing challenges, the private
sector, including financial institutions,
will be called on to take an active role
in providing and advocating for flexible
funding structures to mitigate the long-
term impact of these challenges on their
business and their relevant markets.
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16. Food Security Issues
Electric Grid Reliability
Global Energy Supply Issues
GEOPOLITICAL RISK INDEX
APCO’s Geopolitical Risk Index
(GPRI) is calculated by measuring:
• Media Attention: the volume,
sentiment, engagement and
rate of growth for each issue in
traditional and social media
• Corporate Action: mention of
or response to each risk in the
external communications of
leading corporations
• Momentum: how much the
conversation around each risk has
increased or decreased leading up
to Q4 2023
Our GPRI measures conversational
engagement on key risks covered
in this report in global English
language media. We leverage
natural language processing and
predictive analytics to synthesize
publicly available data from English-
language media coverage, social
media, company websites and
annual reports to calculate scores
that are reflected in the Index.
Q1 2023
CHANGE OVER TIME
Q2 2023 Q3 2023 Q4 2023
Tariff/Non-Tariff Barriers
Mass Migration/Displacement
Climate Change/Environmental Degradation
Inflation and Wages
Political Polarization
Geo-Strategic Decoupling
ANTICIPATING THE TRAJECTORY OF CONVERSATIONS GLOBALLY
(predicted)
GEOPOLITICAL RISK INDEX (GPRI)
OVERALL
GPRI
SCORE
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17. •
Economic risks are high and increasing, driven mainly by high and rising risks
related to inflation/wages, supply chain disruptions, BRICS expansion and
socioeconomic inequality. This indicates growing concerns over cost of living,
global economic rebalancing and impacts of inequality.
•
Energy/environment risks are increasing moderately, with climate change
a top concern and intensifying worries about sustainability and energy
security driving the increase. In Q4 the greatest concern identified relates to
environmental degradation. Renewable energy consumption is the one bright
spot with low and steady risk.
•
Technology/information security risks remain consistently moderate, with
generative AI the top concern. Cybersecurity risk is also elevated, highlighting
concern over emerging technologies and data privacy.
•
Human rights risks are categorized as medium risk but slightly decreasing,
with disease resurgence and food insecurity as leading factors within this risk
category. This suggests some cautious optimism on humanitarian issues.
•
Political risks remain high and increasing, driven by upcoming global elections,
the Russia-Ukraine War and terrorism/extremism. This reflects growing
geopolitical tension and concerns of political instability in multiple regions.
KEY RISKS
Key themes identified for Q4
2023 include economic volatility,
climate change, AI concerns and
potential geopolitical flashpoints.
Here are our key takeaways from
this quarter’s GPRI:
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18. TOPIC RISK DESCRIPTION GPRI
Economic
Risks
Inflation and Wages
Effects of rising prices on food, energy, real estate and automobiles as wages
stall globally.
Supply Chain Shortages
Threats of Russia/China alliance will pose interruptions in production across
tech, automotive and apparel.
Socioeconomic Inequality
Effects of wealth and education disparities on access to health care and critical
social services.
BRICS Expansion* Expansion of BRICS with six new countries stirs global economic uncertainty.
U.S.-China Tensions Impact*
U.S. - China relations unsteady around trade disruptions and China's
weakening economy.
Multilateralism and
Global Economies*
G20 summit outcomes raise concerns over new world order emerging.
Energy
Environment
Risks
Global Energy Supply Issues
Talent availability, cost and capacity in the wake of post-pandemic economic
reconfiguration.
Climate Change/Environmental
Degradation
Effect of war in Ukraine on supply of energy and its impact on renewable
energy market.
Renewable Energy
Consumption
National moves to protect against future energy price spikes by accelerating
investment in alternative sources.
Electric Grid Reliability
Extreme summer heat is straining the electric grid in China, while electricity
shortages due to aging infrastructure could curtail African GDP growth.
Electric Vehicle Production* EV production and adoption not happening fast enough.
Technology
Information
Security
Risks
Generative AI and
Decision-Making
Debate over the reliability and uses of generative AI across industries.
Cybersecurity Cyber risks to energy, banking and other online and cloud-based systems.
GDPR and Data Privacy* GDPR privacy rules and OpenAI compliance.
Technology Bias Reduction* Bias in tech access and outcomes (eg., search engine, genAI) being addressed.
Technology Access*
The global inequality in access to technology impacting education, economic
prospects and job opportunities.
Human
Rights
Risk
Mass Migration/Displacement
Political unrest, war and asylum-seeking will increase migration to the U.S.
and Europe.
Reproductive Health U.S. debate over reproductive choice and access to abortion.
Food Security Issues Hunger and malnutrition affected by the pandemic and the war in Ukraine.
Viral Disease Resurgence* Resurgence of COVID and other viruses threaten global health.
Political
Risks
Terrorism and Extremism Attention to global and domestic terrorism, extremism and societal threats.
Ukraine-Russia War Escalation
Weakened post-Wagner Rebellion, Putin may focus on stabilizing the situation
in Russia rather than dedicating more resources to the war in Ukraine.
Geo-Strategic Decoupling
U.S.-EU hostility to China and Russia is mismatched with the development
priorities of the global south, making global cooperation more difficult.
Global Elections*
Impact of national elections on global stability, international relations and risk
of foreign interference.
HERE'S OUR DATA
This chart shows all the
trend lines for Q4 2023
and the anticipated rise
and fall of issues over the
next three months.
=
Strong Growth
in Conversation
=
Moderate Growth
in Conversation
=
Moderate Decline
in Conversation
=
Strong Decline
in Conversation
PROJECTION
THROUGH Q4 2023
*Topic added in Q4 2023​
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19. UPCOMING GLOBAL EVENTS
SEPTEMBER
September 18–22, 2023
United Nations General Assembly
High-Level Week | New York, U.S.
September 18–19, 2023
Sustainable Development
Goals Summit
September 20, 2023
High-level Meeting on Pandemic
Prevention, Preparedness and
Response (PPPR)
September 20, 2023
High-level Dialogue on Finance
for Development (FFD)
September 20, 2023
Secretary-General’s Climate
Ambition Summit
September 21, 2023
Preparatory Ministerial Meeting
for the Summit of the Future
September 21, 2023
High-level Meeting on
Universal Healthcare (UHC)
September 22, 2023
High-level Meeting on Tuberculosis
NOVEMBER
November 1–2, 2023
AI Safety Summit | Bletchley Park, U.K.
November 9, 2023
Malagasy Presidential Election
November 12–18, 2023
APEC Leaders Summit |
San Francisco, U.S.
November 19, 2023
Argentina Run-off Election
November 22, 2023
The Netherlands General Election
November 22, 2023
Switzerland Federal Election
November 30–December 14, 2023
COP 28 | Dubai, UAE
DECEMBER
Brazil assumes presidency of G20
Togo Parliamentary Election
December 20, 2023
Democratic Republic of the
Congo General Election
OCTOBER
Oman Consultative Assembly Election
October 7, 2023
UAE Parliamentary Election
October 8–12, 2023
Internet Governance
Forum | Kyoto, Japan
October 9–15, 2023
Annual Meetings of the World
Bank Group and the International
Monetary Fund | Morocco
October 10, 2023
Liberia General Election
October 15, 2023
Poland Parliamentary Election
October 16–20, 2023
World Food Forum Flagship
Event | Rome, Italy
October 22, 2023
Argentina General Election
October 29, 2023
Mali Parliamentary Election
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20. ABOUT APCO
APCO Worldwide is an advisory and advocacy communications consultancy. We partner with
organizations to help them catalyze progress, act with agility and build reputations, relationships
and solutions that enable success. APCO is an independent and majority women-owned business
and has helped clients to grow, sustain, and protect their interests for nearly 40 years. Clients
typically come to APCO with complex and unconventional problems that cut across jurisdictions
and do not neatly match the competencies of traditional law firms, lobbyists, PR agencies,
management consultancies or other legacy professional services firms.
ABOUT GEO-COMMERCE
APCO’s Geo-Commerce team advises clients whose interests intersect geopolitics, commerce and
diverse stakeholder interests. The global team works across APCO’s 30+ offices, combining cross-
market insights and connectivity with knowledge of local networks and executional capabilities.
Contact us to discuss what's next:
James W. Robinson
jrobinson@apcoworldwide.com
+1 212.300.1803
apcoworldwide.com