Riskology by Infortal

Join Riskology by Infortal™ Host, Chris Mason, and Tom Hanson, the CEO and Founder of Channel Architect LLC, as they discuss the challenges companies are dealing with in the face shifting global diplomacy and trade relations.

Special Guest: Tom Hanson, the CEO and Founder of Channel Architect

Tom Hanson has more than 30 years of experience guiding companies and governments to trade and investment success in complex international markets. His California-based global trade advisory firm, Channel Architect LLC, builds scalable channel strategies for export-ready providers and prepares its local and national government clients on how to win and retain foreign investors in their jurisdictions.

Tom completed his tenure in 2023 as a commercial officer with the U.S. Foreign Commercial Service, with postings in Bucharest, New Orleans, Calgary, and São Paulo. Throughout, he strengthened the international competitiveness of American businesses and communities by promoting exports and attracting foreign direct investment while ensuring access to free and fair trade.

Infortal Worldwide:

Infortal™ Worldwide provides the full suite of due diligence investigation services to support your company’s risk management program and investment due diligence process. This includes investigation capabilities in over 160+ countries worldwide.

For over 35 years, Infortal™ has enabled clients across all industries to mitigate their business risks and protect employees and assets globally.

Infortal™ Worldwide is also at the forefront of examining how geopolitical risk can impact strategic decision-making, the long-term sustainability of your business, and the potential downstream impact on key partners and suppliers.

Infortal™ Worldwide focuses on solving risk before it starts.

Understanding the Changing Dynamics of International Commerce

In a rapidly evolving global economic landscape, international trade and diplomacy are key factors shaping business strategies, and this episode delves into these complexities. With decades of experience in both diplomatic and commercial sectors, Tom provides invaluable insights into strategic market entry and the current challenges and opportunities in international business. He emphasizes the strength of North America as a united trading bloc, underlining the geopolitical leverage it can wield on the global stage.

Navigating North American Trade: USMCA and Beyond

The importance of the United States-Mexico-Canada Agreement (USMCA) and its implications for companies operating within North America should not be understated. Strategic partnerships and robust distribution channels that can adapt to shifting policies and maintain market resilience are critical to dealing with shifting politics. The ability to leverage close geographic and economic ties with neighboring countries is vital for tapping into undiscovered revenue streams. This requires relationship building and understanding who you are doing business with across borders.

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On January 20th, the President signed an Executive Order focused on designating cartels as foreign terrorist organizations.

This decision could reverberate throughout industries, requiring companies to adapt their approach to due diligence conducted on customers, clients, and suppliers. Third-party risk management teams must consider a heightened regulatory and criminal enforcement environment.

Tune in to Riskology by Infortal™ Episode 41, where hosts Dr. Ian Oxnevad and Chris Mason break down the potential impact of designating cartels as terrorist organizations. 

Executive Order and Its Ripple Effect

Chris Mason emphasizes how "the stakes will be raised… both from a reputational standpoint and a criminal standpoint."

The designation of cartels as terrorist entities could fundamentally shift how businesses operate across the US-Mexico border. Tighter constraints, impacting banks, suppliers, and a wide range of industries, could have a chilling effect as businesses work to adapt their compliance programs to account for exposure to a new regulatory framework.

In-house counsel must also ensure that policies and procedures align with any emerging regulatory or legislative changes.

Cartel Influence on Legitimate Industries

Dr. Ian Oxnevad further illustrates the pervasive reach of cartels into legitimate sectors, using the avocado supply chain as a prime example. Businesses dealing with seemingly innocuous products must now consider the potential risk of indirect association with terrorist networks.

Key Takeaways

For more insights, tune into Episode 41 of Riskology by Infortal.™

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For the milestone 40th episode of Riskology by Infortal™ co-hosts Dr. Ian Oxnevad and Chris Mason are thrilled to welcome Frank Lavin, a Visiting Fellow at Stanford University's Hoover Institution and a leading expert in international commerce.

This episode covers the challenges companies face when taking their business to new markets overseas.

Featured Guest: Frank Lavin

Frank Lavin works on Asia and trade policy as a Visiting Fellow at the Hoover Institution.

In the Reagan Administration, Lavin served on the National Security Council and the White House staff in addition to assignments in the State Department.

Lavin later served in the Bush (41) and Bush (43) administrations, in the latter as Ambassador to Singapore and Under Secretary for International Trade at the Department of Commerce.

In the private sector, Lavin served in senior finance positions in Hong Kong and Singapore with Bank of America and Citibank.

He is a columnist for Forbes.com and the author of several books, including “Inside the Reagan White House,” “The Smart Business Guide to China E-Commerce,” “Export Now,” and “Home Front to Battlefront.”

Key Takeaways:

Tune in to the latest episode of Riskology by Infortal™ to gain a deeper understanding of how to approach international business expansion. 

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In 2025, the geopolitical game is changing.

After over half the world voted in elections in 2024, we're on the brink of significant regulatory shifts that will impact businesses globally.

As we look at 2025, different administrations will clash, shaping a competitive landscape of rules and norms. This means compliance teams will be in high gear as companies must adapt to new regulatory demands.

In the first Riskology episode of 2025, hosts Dr. Ian Oxnevad and Chris Mason break down the top 10 geopolitical risks for companies to consider in 2025.

In 2025, global conflicts won’t just be featured in the headlines; they’ll impact us all, shaping migration patterns, market performance, and corporate strategies.

It's crucial to conduct contingency planning specific to your industry. Riskology by Infortal™ host, Chris Mason notes that, "...contingency planning for the larger financial institutions...involves stress testing, looking at things like liquidity and what your investment portfolio looks like." Contingency plans provide alternative strategies that prepare your business for potential disruptions caused by geopolitical risks, ensuring business continuity.

Companies should also focus on training their teams, especially in areas like cybersecurity and economic espionage. Ensuring that you provide training to your team, particularly at the board level, will place your firm in a stronger position to deal with emerging threats. Training also aids in quicker response times and empowers employees to identify and react to threats effectively.

Want to stay ahead of the geopolitical risk curve? Check out Riskology by Infortal™ Episode 39!

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The Growing Importance of Geopolitical Risk

In 2024, geopolitical risk has increasingly taken center stage in boardroom discussions. Companies are recognizing the complex interplay between global events and their business operations. Firms increasingly acknowledge the need to integrate geopolitical risk management into their corporate strategies and compliance programs.

Board members have also shown a growing interest in geopolitical risk, understanding that global events can have substantial knock-on effects on their operations. This shift is particularly vital given the recent impact of geopolitical events and conflicts worldwide.

By establishing dedicated teams and intelligence networks, firms are now better positioned to consider geopolitics in strategic decision-making and everyday operations. This shift in focus demonstrates that geopolitical risk management is no longer a niche concern but a critical element of corporate governance.

The Reality of Geopolitical Risk

Companies must be vigilant and adaptable, as geopolitical events directly affect global supply chains, market stability, and business continuity.

Establishing robust risk management frameworks that include geopolitical considerations is beneficial and necessary for navigating the current global risk landscape. The lessons learned in 2024 remind businesses to continuously update their risk assessments to reflect the ever-changing geopolitical environment.

Preparing for 2025 and Beyond

As we prepare for the economic and regulatory realities 2025, businesses must prioritize adaptability and foresight. Navigating this evolving landscape requires a proactive approach. As new geopolitical developments emerge, staying informed and prepared will be key to sustained success.

We hope you can join us for the latest episode of Riskology by Infortal.

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Introduction to Maritime Geopolitics

The global economic system heavily relies on maritime shipping. In fact, 90% of all trade travels by sea.

Despite its critical role, maritime shipping often operates under the radar of public awareness. When a package arrives at your door or a product hits the store shelves, little thought is given to the complex journey it has taken to get there. The maritime industry plays an indispensable role in global trade, moving raw materials and finished goods to their destinations around the globe.

Conflicts and tensions in various regions impact the security and efficiency of shipping routes, posing serious challenges to the industry.

From the Middle East to Southeast Asia, maritime channels are becoming hotspots of geopolitical struggles, with significant ramifications for global trade and economics.

Regional Threat Dynamics

The risk landscape and the required risk mitigation techniques can vary dramatically by region.

For example, navigating through the Red Sea entails different challenges and required precautions compared to traversing areas known for piracy, such as West Africa.

Regional Threats:

Managing Risk versus Mitigating Threats

It is important to distinguish between managing risk and managing threats, especially when it comes to managing maritime risk.

Risk management is about adopting strategies to minimize exposure to potential losses, which is an intrinsic part of doing business in the shipping industry. This requires ensuring you have contingency plans in place and verifying that your firm’s compliance policies and programs are up to date.

On the other hand, managing threats involves understanding and neutralizing specific dangers that could jeopardize your operations. In the case of direct attacks, this may even mean protecting a specific vessel's safety. Dealing with threats requires having a tactical plan in place to deploy as needed.

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The Evolving Role of CFOs in Geopolitical Risk Management

CFOs, it's time to rethink how you approach global risk!

Geopolitics isn't just for diplomats - it's seeping into the boardroom and impacting bottom lines, now more than ever.

Join Riskology by Infortal™ hosts Dr. Ian Oxnevad and Christopher Mason from Infortal Worldwide as they highlight the strategic importance of factoring in Geopolitical Risk analysis into CFO-led strategic planning and financial forecasting.

Geopolitical Risk & Chief Financial Officers (CFOs)

In the complex landscape of global business, geopolitical risks hold significant sway over corporate strategy, whether planned or not. Geopolitical risks encompass a wide range of factors, from inflation and economic policies to socio-political dynamics, all of which can disrupt market stability.

Traditionally, the evaluation and management of these risks may not have fallen directly within the purview of CFOs. However, as companies increasingly navigate volatile environments, CFOs find themselves uniquely positioned to incorporate geopolitical risk assessments into financial strategies to ensure longer-term sustainability.

CFOs are integral to a firm's financial health and resilience. As global markets become more interconnected and unpredictable, CFOs must now factor in geopolitical variables that could significantly impact an organization’s operational continuity. Just think about the recent impact that economic warfare, i.e. sanctions, has had on the shipping industry.

Understanding these dynamics is essential for fostering robust financial planning and risk management.

The Impact of Geopolitical Risks on Financial Planning

Geopolitical instability can have far-reaching impacts on various financial aspects of a business, making it critical for CFOs to stay informed and proactive. The key to thriving amidst these uncertainties lies in strategic preparedness and robust scenario planning.

Scenario planning involves envisioning multiple future states and their potential impacts on the business.

By simulating different geopolitical scenarios, CFOs can proactively devise contingency measures to mitigate risks. For instance, understanding how a new trade embargo might affect supply chains allows financial leaders to identify cost-effective alternative suppliers or logistical routes, thereby minimizing disruption and preserving continuity in the event of a significant geopolitical shift.

This financial foresight also aids in maintaining compliance with international laws and regulations, safeguarding the firm from legal repercussions.

Leveraging Technology for Risk Monitoring

The evolution of technology has dramatically enhanced the capacity to monitor and mitigate geopolitical risks. Advanced risk dashboards and sophisticated risk management tools now offer unprecedented capabilities in risk detection and analysis.

Risk management systems can categorize risks, assign scores, and generate predictive analytics, giving CFOs actionable insights. This continuous monitoring is crucial, as it allows for timely adjustments to financial plans, ensuring that resources are allocated efficiently, and emergency funds are available when crisis strikes.

Importantly, you also need to make sure that you are looking beyond the tech solutions to make sure that you have a boots-on-the-ground understanding of the risk landscape. This may require periodic reviews or conducting more in-depth due diligence.

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Riskology by Infortal™ is coming to you this week from the GRC Risk Conference in London. 

Join host, Ian Oxnevad, as he discusses the intersection of AI and Risk with the CEO of BABL AI, Shea Brown. Their discussion covers several dynamics of AI development and implementation in the context of the growing global risk landscape and the challenges posed by autonomous decision making. 

Risk Management & AI

AI introduces new dimensions of risk to the ever-changing risk management landscape by extending the reach of malicious actors. 

Fortunately, as Shea Brown points out, defenders against attacks can also benefit from AI. In fact, companies are increasingly integrating AI into their risk management strategies, which reflects a broader trend towards digital transformation across industries.

AI-based risks, however, are complicated by the fact that there are an increasing number of use cases for new AI technology. For example, there are new vulnerabilities in the fields of autonomous vehicles, facial recognition, and resource distribution. Companies can no longer ignore the building AI revolution. 

To prevent disaster, companies must carefully review their risk exposure to outside actors using AI and from challenges created by using the technology in house. During and soon after implementing AI solutions, it is important to gain a deep understanding of how the new technology will impact existing systems and processes. 

AI-audits provide a great mechanism to ensure that any new tech is up the requisite standards and increases transparency to relevant stakeholders.

Buyer Beware

The market is becoming saturated with seemingly revolutionary solutions in the risk management space. However, increased investment in this space does attract bad actors offering subpar or worse, even fraudulent solutions. 

This makes it important to know who is behind the companies you are considering buying from or partnering with. Conducting deep level due diligence on the companies and partners you plan to do business with in the AI space is important to make sure you are onboarding enhancements and not detractors from your bottom line. 

AI and the Human Element

In the world of AI development, an often-overlooked element for successful AI implementation is the need for human-centric oversight. Human supervisors can catch mistakes that automated systems overlook, providing a needed layer of security and reliability. 

This is especially important in high-risk areas where AI decisions have social and individual impact. By integrating a human-in-the-loop approach, organizations can better align their AI systems with ethical standards and a human focus. 

Mitigating Risks

While integrating AI-based technology into existing programs can pose certain risks for firms, the benefits can be significant. The key is making sure you know what you are getting and that any new technology will live up to your firm’s values. 

Importantly, AI does not eliminate the importance of accounting for human behavior. Currently individuals are still driving decision making and controlling the use of AI technology. 

Conducting due diligence on potential suppliers and performing audits on the AI impact to your company will place you ahead of the curve in terms of benefiting from the AI advancements now available in the risk management space.

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Tune in for the latest episode of Riskology by Infortal™, where special guest Tom Fox of the Compliance Podcast Network and hosts Dr. Ian Oxnevad and Chris Mason dive into the business and compliance implications of Israel’s counterterrorism operation involving Hezbollah’s electronic devices. 

Hezbollah’s Supply Chain Failure and Israel’s Counterterrorism Success 

Israel’s counterterrorism operation in Lebanon on Hezbollah’s electronic devices serves as a stark reminder of the compliance risks that global businesses face. Even though Hezbollah is a terrorist group, the pager operation provides lessons for normal businesses.  

In this particular case, a Taiwanese company called Gold Apollo licensed its name to a Hungarian company, which then manufactured and sold pagers to Hezbollah. This relationship, initially straightforward, became complex as the Hungarian company sought to evolve and use the Taiwanese company's name to make its own proprietary designs. Ultimately, these pagers found their way into the hands of Hezbollah members.

This case raises several compliance concerns. The lack of thorough due diligence by the Taiwanese company allowed for potential misuse of their products. The complexities of tracking ownership and responsibility in global supply chains mean that even legitimate companies can become inadvertently involved in geopolitical conflicts. This event underscores the necessity for robust compliance frameworks to prevent such issues.

Supply Chain Vulnerabilities and Advanced Technology

The use of pagers to coordinate an attack highlights vulnerabilities within supply chains, especially when advanced technology is involved. It was speculated that a Hungarian company acted as a front for Mossad or other intelligence agencies. This kind of covert operation not only increases the complexity of supply chains but also the risk profile for all companies involved.

Additionally, payments originating from unnamed Middle Eastern countries were flagged by banks in Taiwan, highlighting another layer of failure. These offshore payments triggered additional scrutiny and delays, emphasizing the importance of financial transparency and thorough documentation in global transactions. While initially flagged, the transactions were ultimately serviced.

Reputational and Operational Risk Implications

All organizations use electronics tied to complex, cross-border supply chains. Understanding the makeup and oversight of the underlying supply chain should be an important consideration for selecting vendors.

Large corporations, small non-profits and even government bureaucracies can be indirectly exposed to significant reputational and operational risk if supply chains are not managed correctly, as the pager attack scenario illustrates. 

At the end of the day, it pays to know who you do business with, and this requires up front due diligence.

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Join hosts Christopher Mason and Dr. Ian Oxnevad as they discuss how companies can harness the power of intelligence to avoid crises and seek out new opportunities.

How can Companies Use Intelligence?

While intelligence is critical for crisis management, its benefits extend far beyond that.

Companies increasingly recognize the long-term advantages of integrating intelligence into their strategic planning. This involves not just avoiding immediate risks but also identifying long-term opportunities.

Business intelligence isn't just about collecting data; it’s about leveraging the correct information to make informed decisions.

Breaking Down the Misconceptions

Many executives instantly think of spy movies or corporate espionage when they hear "intelligence." This misconception can prevent companies from enjoying the benefits of a developed intelligence collection and analysis program.   

For example, a company might use intelligence to identify potential supply chain disruptions, allowing them to take corrective actions in advance. Similarly, understanding the political landscape can help businesses anticipate changes that might affect their operations or investments.

Trust but Verify Approach

The principle of "trust but verify" becomes paramount when making substantial strategic decisions. Business intelligence is the verifying mechanism, ensuring trust is well-placed and minimizing risks.

Deploying intelligence investigations and integrating insights into decision-making allows companies to navigate complex market conditions with greater confidence and security. This practice helps avoid immediate pitfalls to establish long-term, resilient business strategies.

Assess Your Risk Profile and Decision-making Processes

Before integrating intelligence functions, companies need to understand their risk profile and decision-making processes. This involves conducting a risk assessment of your firm to establish a baseline to improve on.

Then, you must examine your company’s decision-making processes to determine how best to integrate valuable intelligence into your operations. You can navigate risk more effectively by embedding intelligence functions within your operations, providing a competitive advantage.

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