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Global geopolitical risk predictions for 2016

Maria Korolov | Jan. 6, 2016
The recent multi-decade trend towards globalisation is hitting up against a new trend towards localisation and fragmentation this coming year, and that, combined with political and military hotspots around the globe, experts say, is likely to make international companies pay more attention to geopolitical risks in 2016

And, according to Stratfor, Russia is also facing a deteriorating relationship with Turkey.

This leads to the question of the effect Russia's involvement in the foreign conflict will have on the country's local Muslim population, Frank said.

"Will Russia have its own Islamic problem that emerges?" he asked.

Since the breakup of the Soviet Union, there have been wars in many of the surrounding republics, including Azerbaijian and Tajikistan, and within Russia itself in Chechnya. Much of the Caucasus region in southern Russia is Muslim, as is Central Asia, and have had a long history of conflict with Moscow.

"We could be getting into a very concerned time for Russia," said Frank.

EUROPE

Europe is struggling to figure out what to do with a flood of Syrian refugees, especially in light of the Paris terror attacks.

"How are countries in the European Union going to react to that?" asked Nuix' Frank. "And how will that affect the ability to do business, and how it will change business in that whole sector."

Combined with issues of economic volatility in southern Europe, that just adds more pressure on the European Union.

The one bright side of this for business in the region is that these pressures are mostly political -- and politics moves slowly, which will give companies time to react.

That doesn't mean that it's impossible for companies to be taken by surprise, he warned.

"But businesses in these areas, especially ones working in areas of concern, need to be very cognizant of what's happening politically," he said.

CHINA

Beijing's territorial claims in the South China Sea pit China against the Philippines, Taiwan, Vietnam and other neighbors that claim ownership of the key island chains and nearby water.

"China is always the most difficult nation to understand its motivations," said Keith Lowry, senior vice president for business threat intelligence and analysis at Nuix. Lowry was previously chief of staff at the Department of Defense.

"For decades, they've been trying to control the South China Sea," he said. "Now they're building up these bases where they didn't exist before, where the majority of the population that they're trying to overcome is Muslim."

Plus, after years of explosive growth, China's economy is decelerating. That slowdown threatens the global economy, as evidenced by the late summer market scare around the world.

Another potential risk for companies doing business in China is that, according to Stratfor, the country's reform process has reached a precarious phase, with planned reforms focusing on state-owned enterprises, consolidating bloated sectors, looser currency controls, political consolidation and anti-corruption campaigns, as well as a series of ambitious military reforms.

All of these changes could pose potential risks to the international companies they affect

 

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