Russia’s re-invasion of Ukraine comes close on the heels of the COVID-19 pandemic, and Brexit – a series of shocks which have shaken the established world order and caused unparalleled disruption. This summary does not seek to predict what comes next with accuracy. The intention is to highlight the range of the real possibilities, the threats to global security which have been thrown into sharp focus over the months since the invasion, and to summarise concisely how they might impact the business environment.
1 Global food insecurity
There has been a justified focus on food insecurity in the recent weeks. Ukraine exports 12 per cent of the world’s wheat. On top of this, the profound impact of climate change is being felt. Many countries are already facing significant issues due to prolonged periods of drought. The UN has warned that this year 1.6 billion people face food shortages, while 250 million are at the brink of famine – estimates made before the impact of the Ukraine conflict were considered. Civil unrest presents a direct
threat to travellers and limits the ability to travel. We also need to consider the risk of the security situations in countries deteriorating to such an extent that we require staff to be withdrawn or business to be wound down.
2 Russia moving on Kyiv
The war in Ukraine is far from over, and the static then sporadic nature of the conflict over the past month is not a sign of Russia losing momentum. The prospect of Russia advancing much further beyond the Donbas remains a very real and serious possibility. They may choose to push towards Kyiv again, or direct a new offensive against Odessa, seeking to capture the entire Black Sea Coast.
Either move would have serious repercussions for business operations. Kyiv may need to be evacuated again, a new wave of refugees would move through Europe requiring the re-mobilisation of relief efforts, and Moldova may be directly threatened. Further escalation of war in Europe is possible.
3 China making moves on Taiwan
China seems content to watch the unfolding situation in Ukraine before considering any move on Taiwan, but a very real threat remains. If Russia is successful, or fractures in the West’s response grow, China may be emboldened or may seek to take advantage while attention and resources are focussed elsewhere.
Impacts on business will range from restrictions on travel, supply chain issues and increased risk to staff. In effect, exactly what we are experiencing as a consequence of the war in Ukraine, but in locations that are potentially more challenging for UK-based firms to access and support by alternative means (e.g., road moves, short distances).
4 Energy security and wider supply chain issues
Energy supplies remain a key geo-political risk, with Russia holding considerable sway over Europe as a result. While the UK is less reliant on Russian gas and oil, reports this week have warned of the potential for power outages in the winter, if the conflict in Ukraine continues and Russia limits supply to Europe as it has already to Bulgaria and Finland. Businesses in Europe are at greater risk, and the scarcity of energy supplies globally will again stoke civil unrest.
As goods become scarcer, and more expensive, suppliers may not be able to maintain supply chains to business customers. It is worth reaching out to key sub-contractors now to check on their status and pre-empt rising costs or shortages. Plans should be in place to deal with the likely effects, including shortages and rising costs.
5 Brexit
Brexit hasn’t gone away; in some ways it’s only beginning to be felt. Most obviously, arguments over the Northern Ireland protocol remain a potential trigger for a trade war or dispute with the EU. This would exacerbate many of the issues listed above – rising prices, supply chain impacts, limits on travel and ability to move goods, etc. It is also evident that COVID-19 has concealed many of the impacts of Brexit which are only likely to come to the fore now, as supply chains and trade try to return to normal. We are likely to continue to see issues arising - possibly at short notice - over the next few years.
Businesses must ensure that plans are in place to monitor and deal with these issues as they arise. This will require a flexible crisis capacity to fully understand impacts of complex issues.
