The APCO Geopolitical Risk Radar (AGRR) offers a timely snapshot of the global operating environment for businesses. It predicts how regional risks come together at a global level and offers a baseline from which to develop strategies to navigate, mitigate and grow through these risks.

1. GEOPOLITICAL
APCO
RISK RADAR
Q1 2023

2. TABLE OF CONTENTS
THINK GLOBAL, ACT LOCAL​
Welcome to the APCO Geopolitical Risk Radar
(AGRR), an overview of geopolitical risks posed to
global corporations in critical operating regions.
AGRR 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 is focused on the first
three months of 2023 and was published in December 2022.
The regional insights represent the best thinking of APCO
corporate advisory practitioners. With nearly 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 AGRR 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
REGIONAL INSIGHTS
Asia Pacific
China
South Asia
Middle East and North Africa
Russia and Eastern Europe
Western Europe
Latin America
United States and Canada
Q1 GEOPOLITICAL RISK TRAJECTORY
UPCOMING GLOBAL EVENTS
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3. HEADLINE GLOBAL RISKS
Acute Transitory Enduring
Latin America and
the Caribbean
• Leftist majorities fueled by a “pink
wave” face intensifying challenges.
• The strong U.S. dollar and inflation
increase regional economic
vulnerability.
• Brazilian president-elect Lula da Silva
faces challenging fiscal and social
dynamics.
• A left-leaning Latin American bloc
may pivot toward China.
Middle East and North Africa
• Food prices threaten social stability
of lower income nations, while
energy-rich states thrive.
• Climate change is disrupting the
region at twice the global average.
• High prices of crude oil will create
budget surpluses in Gulf Arab states.
• Global capital flowing to MENA in
response to geopolitical tensions
and regional economic vibrancy.
• Protests spark civil unrest and
threaten Iran’s Islamic regime.
Western Europe
• Recession across the continent
begins to bite.
• Energy crisis undermines Europe’s
industrial competitiveness.
• Weakness of major European
governments undermines solidarity
and creates uncertainty.
• EU legislators pursue digital
sovereignty and supply chain
scrutiny.
Russia and Eastern Europe
• The Russian war in Ukraine persists.
• Western sanctions and Russian
countermeasures disrupt global
business.
• Russia conducting commercial and
diplomatic overtures to India, Turkey
and the Global South.
• Risk of nuclear escalation increases
after breakdown of non-proliferation
norms.
China
• U.S. export controls are squeezing
China’s technology sector.
• China eases zero-Covid policy as
social and economic costs mount.
• China’s cybersecurity and data
protection regime tightens.
• Taiwan overshadows efforts to ease
U.S.-China tensions.
South Asia
• India looks to expand regional
influence as it takes over the G20
presidency
• Political uncertainty increases in
Pakistan as new army chief takes
over.
• Sri Lanka pursues fiscal reforms in
effort to stabilize economy.
Asia Pacific
• Inflation persists as risk of recession
looms across Asia.
• U.S.-China power struggle within
ASEAN could have knock-on effect
on trade.
• Political instability dominates
Malaysia’s general election, but the
country remains pro-business.
• Regional tensions increase as North
Korea ramps up missile testing with
improved ICBM capabilities.
United States and Canada
• U.S. and Canada heading toward
recession amid rising interest rates
and declining consumer confidence.
• U.S. and Canada hardening positions
on China despite efforts to reduce
tensions.
• Social issues reset the political
calculus and entangle businesses in
the U.S.
• U.S. electric grid stability faces
ominous outlook.
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4. TOP LINE TRENDS
The global economy is
teetering on the brink
of recession.
Several key economies experienced
negative growth in 2022. A more
widespread global recession
is likely in 2023 in reaction to
stubbornly high inflation and the
requisite interest rate increases by
central banks around the world.
The macroeconomic implications
are multifaceted, from mass
unemployment and emerging
market debt crises to pressure on
weaker currencies and reduced
private investment and spending.
Businesses will face a crisis
in consumer confidence and
constrained spending. At the same
time, many are being forced to
navigate shifting cultural dynamics
as populist movements make gains
in every region.
Food, commodity and
energy prices threaten
social stability, particularly
in Europe and emerging
markets.
The effects of Russia’s invasion of
Ukraine are increasingly being felt
globally. Soaring energy costs,
degraded infrastructure and high
food and commodity price inflation
mean this winter will be difficult
for some regions. Russian-linked
European countries and many
emerging markets face an increased
risk of social unrest as high
commodity prices strain citizens
and exacerbate poverty. In Europe,
sanctions on Russian oil and gas are
likely to result in supply shortages
over the coming months.
Businesses face the triple
challenge of a sharp rise in energy
and manufacturing costs; growing
public and government pressure
to contain price increases; and
continuing pressure to decarbonize
their operations.
Decoupling, divestments and
diversification is giving rise to
the “multi-local corporation.”
Recent efforts by the United States and
China to reduce tensions are unlikely to
resolve structural issues between both
countries. Beijing is doubling down on
building its own domestic technology
capabilities, while Washington—and
increasingly Brussels—is deploying a
host of national security measures and
industrial policies aimed at curtailing
China’s access to leading edge
technologies, namely semiconductors.
To meet competing national demands,
businesses are being driven to
become “multi-local” – diversifying
their operations away from China while
developing new markets and supply
chains within China, for China. These
difficult operational reconfigurations
are taking place as confidence in the
Chinese economy and financial system
declines and the zero-COVID policy
meets increasing resistance.
Cyberattacks are
increasingly challenging
critical infrastructure.
Cyberattacks continue to grow in
both frequency and sophistication
across the public and private sectors.
Research from leading cybersecurity
firms and institutions show consistent
year-on-year increases in attacks, with
industries like healthcare, financial
services and education seeing the
sharpest rises in 2022.
Cyberattacks are inflicting greater
financial and operational damage
on companies. Despite the
worsening threat landscape, surveys
throughout 2022 continued to
show that a majority of businesses,
their customers and investors
remain unprepared and exposed to
potentially devastating attacks.
In 2023, businesses are facing immediate interconnected risks that cut across global operating regions.
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5. ASIA PACIFIC
HEADLINE RISKS IMPACT TO BUSINESSES RISK HORIZON
Inflation persists
as risk of recession
looms across Asia.
• The Asian Development Bank (ADB) forecasts that regional inflation will be 4%
for 2023, due to rising food and energy prices.
• Central banks in developed countries continue to raise interest rates and adopt
aggressive monetary tightening measures to tame inflation. The U.S. Federal
Reserve interest rate hikes that have caused currency depreciation and raised
government borrowing costs for developing countries across APAC.
• APAC governments will likely address inflation by tightening monetary policy.
• Regional businesses are likely to implement more
strategies to protect their businesses against a global
recession, including hoarding cash, cutting staff,
upgrading technology and divesting non-core and non-
productive assets.
• Recessions and economic downturns in the U.S.,
Europe and China will also lower consumer spending,
negatively impacting Asia Pacific export prospects,
especially for export-dependent economies.
U.S.-China power
struggle within
ASEAN could have a
knock-on effect on
trade.
• The tug-of-war between the U.S. and China within ASEAN is causing tension and
increasing polarization among ASEAN members.
• Further bilateral discussions are expected following U.S. President Joe Biden
and Chinese President Xi Jinping’s meeting at the G20, where they expressed
openness to restoring communication and resuming coordination on hot-button
issues including climate change, economic stability, and health and food security.
• Businesses should be prepared for further disruptions
to trade despite the positive engagement between
China and the U.S. on the sidelines of the G20.
• ASEAN and its businesses can find comfort in
multilateral arrangements such as RCEP and other
regional/global free trade agreements to ensure that
openness and cross border trade flows remain viable.
Political instability
dominates Malaysia’s
general election, but
the country remains
pro-business.
• On November 19, Malaysia held snap elections after more than two years of
political instability, during which two Prime Ministers resigned and three coalition
governments collapsed.
• Elections delivered a hung parliament which prompted the King to intervene,
declaring Anwar Ibrahim as Prime Minister and calling for a unity government.
• Regardless of who ultimately leads Malaysia, the
government’s near-term priorities will continue to
center on economic empowerment, environmental
sustainability and social re-engineering, as outlined in
the 12th Malaysia Plan for 2021-2025.
• The Ministry of Finance maintains that digitalization
and technological adoption will be a key area of focus,
with structural reforms planned to attract higher-quality
investments and create high-skilled, well-paying jobs.
Regional tensions
increase as North
Korea ramps up
missile testing with
improved ICBM
capabilities.
• In 2022, North Korea launched over 40 ballistic and cruise missiles and
renewed ICBM testing after a five-year hiatus. In November, a North Korean
intercontinental ballistic missile (ICBM) with enough range to hit the U.S.
mainland splashed down in Japan’s exclusive economic zone (EEZ).
• Officials are warning that North Korea is preparing to conduct its first nuclear
test since 2017, prompting South Korean President Yoon Suk-yeol to warn of an
unprecedented allied response.
• The proximity of recent tests to territories claimed by
Japan and Korea heightens concerns in two of the
world’s largest economies.
Acute Transitory Enduring
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6. CHINA
HEADLINE RISKS IMPACT TO BUSINESSES RISK HORIZON
U.S. export controls
are squeezing China’s
technology sector.
• In October 2022, the U.S. implemented sweeping controls on exports of advanced
semiconductors and semiconductor manufacturing equipment to China as part of a new
strategy to extend its technological edge, protect its competitiveness and safeguard its
national security interests.
• Biden Administration officials have indicated that the U.S. will continue tightening
restrictions on exports of advanced computer technologies, including microelectronics,
quantum information systems and artificial intelligence; biotech and bio manufacturing;
and clean energy technologies.
• The new restrictions represent a paradigm shift in U.S.
export control policy toward explicit containment of China’s
technological advancement, forcing the Chinese chip industry
to localize design and production. Companies should expect
similar measures to be applied to other advanced and emerging
technologies in 2023.
• Despite some one-year exemptions, companies exporting
advanced semi-conductors to China will need to adjust their
product designs and/ or their business models to comply with
the new rules.
China eases zero-
COVID policy;
uncertainty remains
over a potential surge
in cases.
• With rising cases, low vaccination rates among the elderly, lack of crowd immunity and a
fragile public health system, China will struggle to substantively remove COVID control
measures.
• Despite the loosening of testing and quarantine requirements, as well as limitations on the
scale of lockdowns, partial lockdowns remain a distinct possibility with soaring numbers of
daily infections set to test the limits of China’s healthcare system.
• Consumer demand recovery will remain slow due to the ongoing pandemic control
measures as well as pessimistic expectations on household income and overall economic
growth.
• Businesses in China will continue to face the specter of snap
lockdowns, supply chain disruptions and a slower economic
recovery.
• At the same time, the easing of restrictions is likely to lead to a
deadly wave of infections, putting immense strain on hospitals
and creating sporadic and possibly severe labor shortages.
• While the government is expected to enact strong stimulus
measures before the end of 2022, businesses should limit
expectations for China’s economic outlook in 2023, which could
be overshadowed by a high unemployment rate, prolonged
stress in real estate and deteriorating local government finances.
China’s cybersecurity
regime continues to
evolve.
• The Data Security Law (DSL) and the Personal Information Protection Law (PIPL) introduced in
2021 have become corner stones of China’s data regime. However, detailed implementation
measures remain incomplete, such as sectoral data catalogues, the definitions of “important
data” and “critical information infrastructure” (CII), and the review process for cross-border
data transfers, including contract templates for overseas data processing.
• Further, recent Cybersecurity Review Measures continue to prioritize China-specific
technologies and standards in certain market sectors. This is happening while China’s cyber
regulators are increasing the costs of non-compliance and enforcement for Chinese and
foreign companies alike. These trends are expected to continue into Q1 2023 and beyond.
• Foreign businesses need to comply with far reaching
cybersecurity measures without direct guidance from regulators,
relying heavily on their own judgement and following others.
Under-compliance, especially with data and sectors that touch
on national security and social stability can be catastrophic.
Meanwhile, over-compliance can mean unnecessary investments
and localization (both in terms of software and IT personnel) at
the expense of consistent internal technology processes.
Taiwan overshadows
efforts to ease U.S.-
China tensions.
• Republicans in the U.S. are taking control of the House of Representatives in 2023, with many
lawmakers vowing to voice stronger support for Taiwan than their Democratic counterparts.
• Likely next Speaker of the House Kevin McCarthy has said that if confirmed, he will
promptly make an official visit to Taiwan with a Congressional delegation.
• A visit from the Republican House Speaker is likely to draw a negative response from China
but may not be at the scale seen in August 2022 after House Speaker Nancy Pelosi visited
the island.
• Taiwan will remain a highly contentious issue between the U.S.
and China. Businesses operating in China should take care to
use appropriate nomenclature for Taiwan as required by relevant
Chinese law and exercise extreme caution if public comments on
the matter must be made.
• Conflicting stakeholder expectations will require businesses
operating or investing in all three geographies to closely
coordinate all external and internal communications, monitor the
situation and prepare for all possible scenarios.
Acute Transitory Enduring
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7. SOUTH ASIA
HEADLINE RISKS IMPACT TO BUSINESSES RISK HORIZON
India looks to expand
regional influence as
it takes over the G20
presidency.
• India formally takes over the G20 presidency in December 2022, culminating in the leaders’
summit in September 2023. Over the course of 2023, India will host convenings across the
country which will cover a range of topics.
• While the effects of high inflation on consumption and exports continues to be a dominant
concern, India has outlined five priority issues driving its agenda – growth and prosperity,
resilient global value chains, medium and small enterprises, logistics and WTO reform.
• Diversification and decoupling from China will also continue to be key themes as India looks to
attract foreign direct investment.
• Businesses should prepare for spillover
effects in India from a global slowdown but
look for opportunities to engage around
the G20 convenings that will take place
throughout the year.
Political uncertainty
increases in Pakistan
as new army chief
takes over.
• Lt. Gen. Syed Asim Munir was installed as Pakistan’s military chief in December. This is following
an assassination attempt against former Prime Minister Imran Khan, who continues to push
prime minister Shehbaz Sharif’s government and the military to hold snap polls and after
announcing his Tehreek-e-Insaf party would quit the country’s national and regional assemblies.
• Pakistan’s government remains in discussions with the IMF about additional funding as it
works to recover from massive flooding in 2022 that destroyed large swaths of farmland and
infrastructure.
• Persistent economic and political turmoil
in Pakistan continue to undermine
business confidence and harm foreign
direct investment.
Sri Lanka pursues
fiscal reforms in effort
to stabilize economy.
• Sri Lanka is in the midst of its worst economic crisis in decades, driven by surging inflation, a
weakening rupee and diminishing currency reserves that left the country struggling to import
essential goods like food and fuel.
• The government pledged a series of reform measures that will raise personal and corporate
taxes and reduce spending in order to secure a US $2.9 billion IMF relief loan. In December
2022, the World Bank, IMF and Asian Development Bank indicated that a coordinated assistance
program would be required to help the country recover from the crisis.
• The Central Bank expects inflation, which hit 70% at its peak, to pull back and foreign currency
inflows to increase in 2023. The government aims to complete its debt restructuring in the first
half of 2023.
• High inflation and other economic
challenges have hit exports and domestic
consumption. A revival of the country’s
tourism industry, one of its largest
sources of foreign exchange reserves, is
likely by the end of 2023.
• Sri Lanka’s economic recovery will
largely depend on the government’s
ability to institute meaningful fiscal
reforms, though higher taxes and
reduced public spending could trigger
social unrest amid high inflation and
rising food insecurity.
Acute Transitory Enduring
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8. HEADLINE RISKS IMPACT TO BUSINESSES RISK HORIZON
Food prices threaten
social stability of
region’s lower income
nations, while energy-
rich states thrive.
• According to the IMF, the region’s GDP is forecasted to slow to 3.6% in 2023, down from 5% in
2022, while headline inflation is expected to reach 11.2%.
• Exacerbated by global conditions, the region’s low- and middle-income countries are gearing
up for volatile food and high commodity prices, worsening debt dynamics and tightening
financial conditions, raising the risk of social unrest.
• Even with the $3 billion IMF rescue deal, Egypt’s financial stability remains fluid – its debt
interest payments are estimated to absorb more than 40% of the government's revenues in
2023, while its foreign debt due through to mid-2025 totals about $33.9 billion.
• Companies can expect weakening
consumer demand as the region
grapples with projected double-digit
inflation in 2023.
Climate change
is disrupting the
region at twice the
global average.
• The IMF has found that climate disasters are rising at twice the global average in the Middle East
and Central Asia, providing fresh impetus to governments and companies across the region to
reduce emissions, increase renewable energy sources and invest in climate-resilient infrastructure.
• At COP 27, Saudi Arabia announced the near completion of 10 renewable energy projects
capable of connecting an additional 840 megawatts (MW) of solar photovoltaic (PV) power to
the grid in 2023, while the UAE (COP 28 host) and Egypt have entered into an agreement to
build a 10-gigawatt onshore wind farm project in Egypt.
• As regional governments continue to
formulate and adapt their systematic
national strategies, more businesses will
be expected to take on a bigger role to
address climate change and help the
region achieve net zero emissions.
High prices of
crude oil will create
budget surpluses in
Gulf Arab states.
• OPEC+ imposed large production cuts in October 2022 to shore up prices, defying U.S.
pressure. This has held up the price of oil, fueled the regional energy boom, and created
budget surpluses for many Gulf Arab states.
• Moving forward, national economic self-interest will increasingly drive foreign policy for
energy-rich Gulf Arab states, weaking ties between states like Saudi Arabia and the UAE with
traditional geopolitical allies.
• Companies can expect robust
government spending from Gulf Arab
states in the near future, but higher
oil prices will further fuel inflation and
constrain economic growth.
Global capital is
flowing to the
region in response
to geopolitical
tensions and regional
economic vibrancy.
• IPO listings in the Middle East—primarily in Riyadh, Abu Dhabi and Dubai—are seeing strong
investor interest, and have generated around $18 billion this year. Three more IPOs are
expected by year-end in Abu Dhabi, and 11 more companies are gearing up for public listings
on Abu Dhabi Securities Exchange in 2023.
• In the wake of global decoupling, some companies are increasing their presence in the
region, which is seen as a neutral, business-friendly crossroads between eastern and western
geopolitical powers.
• Despite fluctuating oil prices, soaring
global inflation and the threat of
recession, investor interest in the region
is expected to be robust in 2023.
Protests spark civil
unrest and threaten
Iran’s Islamic regime.
• Protests and strikes—fueled by Mahsa Amini’s death and decades-long struggles over poverty,
inequality, unemployment and corruption—have intensified pressure for systematic change in Iran.
• The regime’s dwindling domestic support and deadly crackdown on the protests will bring about
more political and economic instability, civil unrest and coordinated international condemnation.
• Economic adversity and discontent for
the Islamic regime will continue, and
skilled Iranians will look to relocate
businesses and livelihoods to more
stable countries.
MIDDLE EAST AND NORTH AFRICA
Acute Transitory Enduring
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9. HEADLINE RISKS IMPACT TO BUSINESSES RISK HORIZON
The Russian war in
Ukraine persists.
• Combat operations will continue throughout the winter. Russia completed the mobilization of
more than 300,000 new soldiers and destroyed much of Ukraine’s civilian power grid, leaving
large segments of the Ukrainian population at risk of rolling blackouts this winter.
• The conflict will continue and possibly escalate in Q1 2023 as Putin looks to show strength after
a series of major battlefield setbacks in recent months.
• Escalation poses greater risks for
businesses through continued supply
chain disruptions, unstable energy prices,
an ever-changing sanctions landscape
and Russian countermeasures restricting
foreign companies’ operations.
Western sanctions
and Russian
countermeasures
disrupt—and
potentially decouple—
global business
structures.
• Russia has adopted legal and procedural hurdles to slow or halt the exit of companies from
“unfriendly” Western countries and is selectively expropriating foreign assets in industries the
Kremlin deems “strategic,” such as energy.
• Major battlefield setbacks increase the likelihood that the Kremlin will adopt more aggressive
countermeasures, including broadening the expropriation of foreign assets to other industries.
• Many Western companies are
proceeding with their already-announced
exits from the Russian market.
• Companies that remain should expect
continued reputational risk and a
potentially more hostile Russian regulatory
environment as the war continues.
Russian commercial
and diplomatic
overtures to India,
Turkey and the Global
South grow.
• Russia will continue leveraging its role as a key global supplier of grain, fertilizer and energy
to win influence among poor countries and those hit hardest by high commodity prices and a
strong U.S. dollar.
• India has been buying Russian energy at fire sale prices while Turkish banks are thought to be
helping Russian individuals and entities evade sanctions. However, governments in Turkey and
India are unlikely to publicly align with Russia and will maintain their balanced position with
the West.
• Russia has aggressively reduced the use of the U.S. dollar in trade, prompting other countries
that import Russian commodities—such as India, China, and Turkey—to follow suit.
• So-called “nonaligned” markets will be
increasingly competitive, with Russian
and Russia-aligned companies looking
for trading partners, customers and
vendors to soak-up excess stock and
fulfill supply needs.
Breakdown of non-
proliferation norms
raises the risk of a
nuclear escalation.
• Russia continues to occupy the Zaporizhzhia nuclear power plant in Ukraine, effectively using
the facility to shield combatants from enemy fire, risking a nuclear disaster. Russia may connect
the plant directly to the Russian power grid, undermining Ukraine’s energy independence.
• While Russia has threatened to use nuclear weapons to “defend” annexed Ukrainian territory,
pressure from global leaders including President Xi of China and Prime Minister Modi of India
may reduce this risk.
• Together, Putin’s nuclear threats are raising credible fears that the Ukraine conflict could expand
into a direct military confrontation between Russia and NATO, with the U.S. warning Moscow
of unspecified “catastrophic consequences” should it escalate the war beyond conventional
theaters of battle.
• Any nuclear misstep would destabilize
the status quo and would likely shock
global markets and wider global
economy.
RUSSIA AND EASTERN EUROPE
Acute Transitory Enduring
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10. HEADLINE RISKS IMPACT TO BUSINESSES RISK HORIZON
Recession across
the continent begins
to bite.
• A recession is expected to begin in most eurozone countries in Q4 2022 or Q1
2023 as a result of persistently high inflation and soaring gas prices. Germany is
likely to suffer a particularly acute downturn.
• While the European Commission predicts a return to modest growth across the
eurozone by Q2 2023, a recession is likely to cut more deeply some parts of
Europe, and a UK recession is projected to extend into 2024.
• Eurozone governments are hamstrung by economic
and political shocks from the war in Ukraine and COVID-
induced debt levels, which leave little room for fiscal
maneuver and may extend the length of recession.
• In several large European markets, businesses will face
declining consumer expenditure along with tax increases,
increasing interest rates, and limited fiscal support.
Energy crisis in
Europe undermines
industrial
competitiveness.
• Energy prices have hit all-time highs in 2022 in Europe, and the price of energy is
expected to continue to remain high in Europe well into 2023, as it takes time to
replace Russian gas supplies with supplies from other sources.
• EU countries and the UK have adopted emergency regulations to address high
energy prices to reduce the impact on consumers and businesses.
• While European governments are largely on track to fill their gas stores, that
storage is likely to be depleted by spring 2023. With little current import capacity,
the scramble for gas will be challenging in 2023.
• High energy prices will lead to a higher debt burden,
declining cost competitiveness, and more business
failures. Rising input costs risk making European
industry uncompetitive.
• The “green transition” to renewables and away from
gas will accelerate, while costly LNG from the U.S. and
Gulf states will help fuel short term needs.
Weakness of
major European
governments
undermines
solidarity and creates
uncertainty.
• Despite relative solidarity on Ukraine, Europe is grappling with several weakened
national governments: ongoing upheaval within the UK’s ruling Conservative
Party, teething pains in Germany’s coalition government, President Macron’s lack
of a parliamentary majority in France and a new far-right leadership in Italy.
• This more complex political climate will make the directions of key European
governments less predictable and raises questions about their ability to
coordinate on current challenges.
• The strongest member states may increasingly pursue their own unilateral
national solutions – such as Germany’s €200 billion energy relief package and
Chancellor Scholz’s bilateral engagement with China – contributing to tensions
with European neighbors.
• Lack of trust within and between governments will
make it more difficult for them to coordinate decisive
action on issues such as responding to the global
recession, supporting European business interests and
tackling the energy crisis.
• Businesses are also facing increasingly
mixed signals regarding their trade and investment
relationships with third countries, especially China.
EU legislators pursue
digital sovereignty
and supply chain
scrutiny.
• Before European elections in 2024, in early 2023 EU legislators will work to
finalize parts of the current European Commission’s regulatory ambitions for
digital sovereignty and secure and sustainable supply chains.
• Legislative institutions will formulate and aim to adopt their positions on the EU’s
Data Act, Chips Act and AI Act in Q1 2023, before they negotiate the final texts.
• The European Parliament will continue to push to expand the scope and nature of
obligations of the EU’s new supply chain due diligence regime.
• Businesses should prepare for European legislation
on key parts of the tech ecosystem from cloud and
industrial data to microchips and artificial intelligence.
• The scope and obligations of new supply chain
mandates should be monitored carefully by corporates.
WESTERN EUROPE
Acute Transitory Enduring
10
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Geopolitical
Risk
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Q1
2023

11. LATIN AMERICA
HEADLINE RISKS IMPACT TO BUSINESSES RISK HORIZON
Leftist majorities
fueled by a
“pink wave”
face intensifying
challenges.
• Latin America continues to face a stream of popular protests and social unrest
over worsening corruption, violence, inequality and poverty. This is being
compounded by rising food and fuel costs stemming from Russia’s invasion of
Ukraine and a host of local issues, such as cultural divisions, climate events and
indigenous affairs.
• As newly elected left-leaning governments settle in, including in Brazil and
Colombia, calls will grow for candidates to deliver on their promises to
significantly boost social welfare spending, raising the risk of further unrest if
expectations are not met.
• The persistent threat of social unrest undermines
investor confidence by creating an environment of
uncertainty and risk.
• Critical sectors in large economies, like
mining in Brazil, are prone to local popular resistance.
However, businesses have an opportunity to focus on
ESG-related issues, which resonate with the progressive
agendas of many new leaders.
The strong U.S.
dollar and inflation
are increasing
regional economic
vulnerability.
• As the U.S. dollar has strengthened, countries across the region have seen their
currencies weaken, with the Argentine peso declining 25%, the Chilean peso
16% and the Colombian peso ranking as the third worst-performing currency in
the world.
• Moving into 2023, inflation will remain high and real GDP growth is expected to
decrease by almost half, leading to increased financial risks under the
new administrations.
• Companies in Latin America should be prepared
for restrictive policies on private consumption and
investment, while also keeping an eye on opportunities
to capitalize on the growth momentum in service
sectors such as fintech, manufacturing and tourism.
Brazilian president-
elect Lula da Silva
faces challenging
fiscal and social
dynamics.
• Former president Luis Inácio Lula da Silva (Worker’s Party) defeated incumbent
president Jair Bolsonaro (Liberal Party) in Brazil’s tightest electoral race to date,
winning with 50.09 percent of votes, versus Bolsonaro’s 49.10 percent.
• Lula is inheriting a challenging fiscal situation and deepening polarization,
while facing a potential global recession. His plans include zero and discounted
income tax, guaranteed income for the poorest, a large popular housing
program and an adjustment of the minimum wage to account for inflation.
To maintain Brazil's social programs, Lula's transition team has negotiated an
expansion of the spending cap, which has already been approved by Congress,
guaranteeing benefits for at least his first 100 days in office.
• Lula’s ambitions will be tamed by a divided
Congress, providing businesses and investors with
a sense of reprieve – though he is likely to push for
increased social spending without setting long-term
financial guidelines. APCO expects a new fiscal plan to
come closer to 2024, when the spending cap increase
will expire.
A left-leaning Latin
American bloc may
pivot toward China.
• Leftist governments in Latin America have historically taken a more critical
approach to the U.S., adopting harsh rhetoric and enacting laws and regulations
that adversely affect U.S. businesses.
• Disputes over immigration, drug trafficking and human rights could further strain
relations with the U.S., while China—currently South America’s top trading partner
and the second largest for Latin America as a whole—is likely to use its growing
economic weight to deepen its security and commercial ties with the region.
• China’s continued success in building digital
infrastructure like telecommunications, cloud
computing and smart cities throughout the region is
establishing commercial dependencies that threaten to
shut out geopolitical competitors in a range of digital
products and services.
Acute Transitory Enduring
11
APCO
Geopolitical
Risk
Radar
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Q1
2023

12. HEADLINE RISKS IMPACT TO BUSINESSES RISK HORIZON
The U.S. and Canada are
likely to enter recession
amid rising interest
rates and declining
consumer confidence.
• Economists predict that the U.S. and Canada will enter a mild recession in 2023 as central banks continue
tightening monetary policy to combat stubbornly high inflation, at 7.7% in U.S. and 6.9% in Canada in October.
• Additional pressure comes from continuing labor shortages, supply bottlenecks, depleted personal savings,
spiraling U.S. federal and local government debt, and the continuing war in Ukraine.
• High interest rates will lead to declines in new business
investment, diminished corporate and stock market
valuations, and a reverse in the unemployment rate.
• Consumers and governments will feel increasingly
squeezed, adding pressure to businesses.
The U.S. and Canada
will harden their
positions on China
despite efforts to
reduce tensions.
• In the U.S., the Uyghur Forced Labor Prevention Act, the CHIPS and Science Act, and new export controls restricting
China’s access to advanced semiconductors are adding friction to the bilateral trade and investment relationship.
• Canada’s newly released Indo-Pacific strategy takes a hard line on China, labelling it a disruptive global actor.
• Structural issues between the U.S. and China remain unresolved, and a new Republican-led House promises
to take a harder line on Beijing. The Biden Administration is also poised to roll out more trade restrictions in
2023 as it intensifies efforts to block China from accessing and developing certain advanced technologies.
• Questions remain as to whether the U.S. Inflation Reduction Act will undermine alliances with European and
East Asian allies and potentially lead to additional transatlantic and transpacific trade tensions.
• A potential outbound investment executive order will
further restrict U.S. business investment in China and
accelerate technological decoupling between
both countries.
• Some U.S. and Canadian businesses will continue to look
for opportunities to diversify and divest.
Social issues reset the
political calculus and
entangle businesses in
the U.S.
• Measures to counter “wokeness” and “woke capitalism,” as well as social and cultural divisions over issues
like abortion and gun control, are leading to high profile disputes between U.S. elected officials, major
corporations, investors, parent groups, employees and activists.
• U.S. congressional Republicans plan to target “woke” corporate policies and investment principles using
their new House majority, calling for congressional hearings and proposing legislation – though any federal
efforts are unlikely to succeed under a divided government.
• Meanwhile, many employee groups and investors will continue to demand corporate action on issues,
including climate action and diversity initiatives.
• Companies can expect to be caught in the crossfire
of the United States’ intensifying culture wars more
frequently as these disputes gain more traction and
attention at the national level.
U.S. electric grid faces
an ominous outlook.
• Aging and poorly maintained grid infrastructure, energy supply shortages and a potentially harsh winter in
several parts of the U.S. have raised the risk of rolling blackouts through 2023.
• The North American Electric Reliability Corporation warned in November that the central U.S. is most at risk
of power disruptions while New England faces a shortage of natural gas.
• Large-scale power outages could disrupt manufacturing,
logistics and other business operations in Texas and
several nearby states during periods of extreme low
temperatures this winter.
• The shift to renewable and alternative energy sources
will accelerate in 2023 with the implementation of the
Inflation Reduction Act.
U.S. industrial policies
aimed at China risk
retaliation from
Western allies.
• Two major pieces of legislation—the CHIPS and Science Act and Inflation Reduction Act—commits hundreds
of billions of dollars in federal subsidies to re-shore semiconductor manufacturing and accelerate the
transition to renewable energy in the U.S.
• U.S. allies, including European nations, Japan and South Korea, are concerned that renewable energy
subsidies and localization requirements provide U.S. companies with an unfair advantage, threatening
retaliation and the potential for transatlantic trade disruption.
• Following a state visit by French President Emmanuel Macron in December, Biden said he was confident
some differences over subsidies between the EU and U.S. could be resolved.
• Without a carveout for European companies, the EU
could retaliate against American business and trade,
offering subsidies to its own industries or applying tariffs
on certain U.S. goods.
UNITED STATES & CANADA
Acute Transitory Enduring
12
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Risk
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Q1
2023

13. GEOPOLITICAL RISK TRAJECTORY
Energy, trade and tariffs, and political
polarization are predicted to become
leading areas of attention among global
media and corporate boardrooms in Q1
2023 according to APCO’s data analytics.
APCO Insight uses natural language processing and predictive
analytics to calculate the GPRI. Underlying data is drawn from a
variety of secondary, publicly available sources including media
coverage, online conversation, company websites, and annual
reports.
APCO’s Geopolitical Risk Index (GPRI) is calculated based on
Attention vs. Action:
Media Attention measures the volume, sentiment, engagement and
rate of growth for each issue in traditional and social media.
Corporate Action measures mention of or response to each risk in
company external communications.
GEOPOLITICAL RISK INDEX (GPRI)
Q4 2022 Q1 2023 GPRI (predicted)
Global Energy Supply Political Polarization
Tariff/Non-tariff Barriers Energy Independence
Climate Change Risks
COVID-19 Elections Food Security
Overall
GPRI
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2023

14. APCO
GPRI
Energy & Environment
Energy independence
Global energy supply
Energy transition
Energy security
Climate change risks
Natural disasters
Overall Energy & Environment Risk
Economic
Trade disruption
Protectionism
Tariff/non-tariff barriers
Inflation
Ease of doing business
Overall Economic Risk
Security Risk
Interstate conflict
Forced migration
Cybersecurity
Data privacy
Disinformation
Overall Security Risk
Human Rights
Food security
COVID-19
Nutrition
Health
Overall Human Rights Risk
Political Risk
Intrastate conflict
Nationalism
Elections
Political polarization
Overall Political Risk
GEOPOLITICAL RISK
TRAJECTORY
Online conversations suggest a range of energy and
economic risk factors are expected to garner the
greatest attention in Q1 2023. Energy independence
and global energy supply are the dominant risk
factors in the energy and environment category. Trade
disruptions, tariffs and inflation are the main drivers of
the economic category.
Our Global Conversation Radar complements the GPRI
and measures English language engagement taking place
on online platforms globally.
= Strong Growth in Conversation
= Moderate Growth in Conversation
= Moderate Decline in Conversation
= Strong Decline in Conversation
PROJECTION THROUGH Q1 2023
APCO Global Conversation Radar Q1 2023​
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APCO
Geopolitical
Risk
Radar
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Q1
2023

15. UPCOMING GLOBAL EVENTS
ASIA PACIFIC
Q1 2023 (TBD)
ASEAN Summit 2023 in Indonesia
March 27-30, 2023
UN Economic and Social Commission for
Asia and the Pacific – Asia Pacific Forum on
Sustainable Development
May 2-5, 2023
Asian Development Bank Annual Meeting
May 7, 2023
Thailand general elections
May 19-21, 2023
G7 Hiroshima Summit
November 2023 (TBD)
Asia-Pacific Economic Cooperation’s 2023
Economic Leaders’ Meeting
CHINA
(TBD) 2023
Blinken visit to China
March 2023
China’s Two Sessions
SOUTH ASIA
Beginning December 2022
Indian state elections in the run up to 2024
national polls
(TBD) 2023
Pakistan general election: 2023, date to be
announced
September 9-10, 2023
G20 Leaders’ Summit hosted in New Delhi
MIDDLE EAST AND NORTH
AFRICA
January 14-15, 2023
IRENA Assembly (UAE)
January 14-21, 2023
Abu Dhabi Sustainability Week (ADSW)
(UAE)
February 13-15, 2023
World Government Summit 2023 (UAE)
(TBD) 2023
MENA Climate Week 2023 (Saudi Arabia)
May 22-26, 2023
Annual Meeting of the African Development
Bank, Sharm El Sheikh, Egypt
November 28-December 12, 2023
COP 28 UN Climate Change Convention,
UAE
WESTERN EUROPE
January 13-14, 2023
Czechia presidential election
January 16-20, 2023
World Economic Forum Annual Meeting
in Davos: “Cooperation in a Fragmented
World”
February 5, 2023
Cyprus presidential election
February 17-19, 2023
Munich Security Conference
March 5, 2023
Estonia parliamentary election
March 23-24, 2023
European Council summit
LATIN AMERICA
January 1, 2023
Inauguration of Lula da Silva (Brazil)
March 2023
Parliamentary Elections (Cuba)
March 2023
General Elections (Antigua and Barbuda)
UNITED STATES AND
CANADA
January 3, 2023
New 118th U.S. Congress convenes
January 31, 2023
U.S. Federal Reserve Meeting
January—February, 2023
U.S. President’s State of the Union
February 6, 2023 (Tentative)
U.S. President’s budget is released
March 21, 2023
Federal Reserve Meeting
15
APCO
Geopolitical
Risk
Radar
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Q1
2023

16. 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 more than 35 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