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Michael Saltzstein on Global Risk Management in Times of Conflict

Michael Saltzstein believes risk management is critical to both successful business practices and successful military operations during a time of conflict between nations. Although the danger is inherent in many military duties, planning for operational contingencies can reduce risks and save lives. Moreover, mitigating risk in a coalition environment is even more critical because the scenarios that planners must consider are complicated by various policies, equipment, training, and security procedures.

 

According to Forrester Research, Inc. analysts, the ramifications of the Russia-Ukraine friction are reverberating in global markets. Risk management leaders worldwide are already, or will soon be, dealing with the impact of the conflict and sanctions. AM Best reported that the industry's indirect exposure could be significant.

 

First Steps Toward Loss Prevention

According to Michael Saltzstein, the first step for commercial policyholders with business units exposed to the conflict zone should be to plan to maintain resilience for those divisions. It must include risk managers meeting with chief security officers and IT leaders to assess whether they rely on technology suppliers in the impacted regions and evaluate their ability to switch suppliers if necessary. You should review business continuity plans, supply chain arrangements, and alternative third-party vendors. Additionally, executives should have the authority to make quick decisions on alternative suppliers if the need arises.

 

Furthermore, according to Forrester's analysis, businesses should brace themselves for additional supply chain bottlenecks, as sanctions and other disruptions might wreak havoc on supply chains over the next 24 months. These issues are expected to manifest through higher fuel prices, possible shortages, and increased freight and travel costs.

 

After considering the business units at risk and the supply chain, Michael Saltzstein advises risk managers to pay attention to the changing situation, particularly those that may necessitate changes to third-party vendors. In addition, as analysts expect more sanctions, it is best to be proactive in screening third-party partnerships, including direct partners, foreign affiliates, and customers.

 

Furthermore, it would be good to prioritize geopolitical instability in the enterprise risk management plan. It should consider all the new geopolitical risks, and the impact analysis should include potential conflict and its aftereffects.

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