Key Points
- The past two years have highlighted the vulnerability of some multinationals’ operations and even loss of control in the event of geopolitical disruption.
- Drawing on the lessons of 2022 and 2023, businesses should formulate contingency plans to ring-fence units in vulnerable jurisdictions and plan for potential exits.
- Those plans should encompass everything from modified supply chains to IP rights and IT support, cash management and protections for local management.
With mounting geopolitical tensions, multinationals face a very real and immediate risk of being deprived of profits, control or even ownership of some wholly or partially owned local businesses. As a result, business leaders are expected to formulate contingency plans for foreseeable geopolitical and trade threats, including new conflicts, economic sanctions, hostile action by national authorities toward foreign investors and public pressure compelling a withdrawal.
Such contingency plans should set forth the path to a full exit or, at a minimum, to ring-fencing the local business. Applying the “in country for country” approach can help mitigate the exposure risks of the global business, its people and…
