Geopolitical risk to offer CIOs new business opportunities, says Gartner

As political frictions heat up across geographies, affecting enterprises' operations globally, including technology governance issues, it is time for chief information officers (CIOs) to wake up and smell the coffee. Forty-one percent of board of directors view geopolitical power shifts and turbulence as one of the biggest risks to performance, according to a new Gartner survey, which further predicts that by 2026, 70% of multinational enterprises will adjust the countries in which they operate by hedging to reduce their geopolitical exposure.  

Geopolitics describes the geographic influences on power relationships in international relations, said Gartner. The resulting competition between nations plays out in many areas, including economic, military and society. Due to the increasing importance that digital technology plays in each of these areas, digital geopolitics is emerging as its own unique category of impact. The analyst firm sees these new geopolitical risks as opportunities for tech leaders to step up to lead. 

“Digital geopolitics is now one of the most disruptive trends that CIOs must address, with many now dealing with trade disputes, legislation coming from one country that impacts global operations, and government-imposed restrictions on the acquisition and use of digital technology,” said Brian Prentice, VP analyst and Gartner Fellow. “They need to get acquainted with this new reality and prepare for its impact.” 

Gartner said, CIOs must play a pivotal role in assessing corporate risk and, if required, re-architecting digital systems.  

In order to do so, they need to manage four distinct facets of digital geopolitics, such as protect digital sovereignty, build a local technology industry, achieve necessary military capability and finally exert direct control over the governance of cyberspace.  

Sometimes, these steps are easier than done. For example, the machinations by governments for control over cyberspace governance are beyond the influence of CIOs, but they can advance the executive team’s understanding of cross-national competition for control over cyberspace and the impacts to their enterprise’s operations by leading an annual cyberspace environmental update briefing. Likewise, as governments are primarily addressing digital sovereignty through their legislative and regulatory powers, such as privacy laws like the GDPR, and are increasingly turning to extraterritorial legislation, CIOs must be proactively engaged in ensuring that the IT organisation’s operating model and practices reflect current laws and regulations in place. 

Also, many national governments are investing in developing a home-grown tech sector that can provide CIOs with an opportunity for proactive engagement with governments and localise specific initiatives into countries that have the best integration between local expertise and access to the government co-innovation support. 

A July 2021 article by McKinsey also echoed similar challenges that geopolitical risks create. It said, over the next two decades, competition for global influence is likely to reach its highest level since the Cold War. That’s one finding from the US National Intelligence Council’s report Global Trends 2040: A more contested world. According to the report, “no single locale is likely to dominate all regions or domains, and “a broader range of actors will compete to advance their ideologies, goals, and interests.”