[Nigel Gould-Davies, Tectonic Politics. Global Political Risk in an Age of Transformation, (Washington, DC: Brookings Institution, 2019) 174 pp].
March 17, 2021
review / Emili J. Blasco
The discipline of "political risk" can be conceived in a restrictive way, as usual, referring to the prospective analysis of disruptions that may affect political and social stability and the regulatory framework and, therefore, the interests of investors, companies and economic sectors. This conception, which globalization also leads to call "geopolitical risk", is only a part - in fact, the minor part - of Nigel Gould-Davies' approach, who, by using the adjective "global" in the degree scroll of his book, is referring to a conceptually more general political risk, merged with fields such as corporate reputation, public affairs and business diplomacy.
The author claims that the relationship with the environment is essential for a business and calls for a company's management to always include someone manager for engagement (which could be translated as involvement, commitment, participation or partnership): an engager with the same level of authority as the engineer who knows how to manufacture the product and the salesperson who knows how to monetize it; someone specialized in "persuading" external actors - governments and civil society groups - of the company's benefits, creating beneficial "alignments" for business. Engagement at both national and international level, if the activity or interests go beyond the company's own borders, giving rise to "corporate diplomacy", since the current "increase in political risks means that a company needs a foreign policy".
Gould-Davies considers that these more political issues are not an "impertinent intrusion" into markets, but are endogenous to them. So the business, in addition to attending to production and marketing issues, must also pay equal attention to a third dimension: engagement with political and social actors to avoid or overcome risks presented to it in that external sphere. This is "a third activity and a third role to carry it out: a new political piece in the mechanism of value creation".
The author emphasizes the management of the present and the very short-term future, and downplays the importance of the short- and medium-term prospective analysis that has been the preserve of political risk analysts. He complains that the latter have paid "too much attention to prediction, with its frequent disappointments, and too little to engagement"; " engagement, on the other hand, requires relatively little prediction beyond the short term." "There is a lot of unbalanced political risk activity, producing a great deal of analysis and prediction, but much less guidance on what to do."
Moreover, unlike the usual political risk analysis, which is more focused on the actions of states or governments, the concept used by the author extends very specifically to the pressures that can derive from civil society. "The new political risks emerge from non-state social forces: consumers, investors, public opinion, civil society, local communities and the media. They do not seek to challenge ownership or rights to use productive assets. They do not seek to destroy, take or block. Their focus is narrower: they usually seek to regulate the terms on which production and trade take place (...) Their motive is usually an ethical commitment to justice and equity. Their goal is to mitigate the broad adverse impacts of corporate activity on others; they are selfless rather than selfish."
Gould-Davies notes that while previously the norm was government threats in development or emerging countries, which have less stable societies and an unconsolidated rule of law, today pressures on business are increasing in developed nations. "The likelihood of major conflict and de-globalization is increasing, but more importantly, its impact is turning toward the developed world," he writes. Moreover, the fact that there is less and less social peace in Western countries is an increasingly disturbing element: "Sustained civil violence in a highly developed country is no longer a black swan, but a gray swan: unlikely but conceivable; possible to define, but impossible to predict."
By focusing on the management of the present and characterizing the activity as engagement, which is in itself very focused on communication, Gould-Davis stretches too far the classic concept of political risk, which has been more oriented towards analysis and prospecting. In doing so, he treads on activities that are now becoming widely known development for their own sake, such as corporate communication and reputation or influencing regulatory issues through lobbying or public affairs management functions.
