Business Risk Is All About Location
History teaches us that geopolitics is a universe in a constant state of flux. There is a perennial upheaval and reshuffling of destinies affecting both peoples and economies. Because of this, it is becoming particularly important for companies that do business around the world to understand and learn how to manage geopolitical risk. A tool developed by the students in the course 'Geopolitics for Business' – taught by Andrea Colli, Professor of Economic History – can be used to do just that. It is a geopolitical risk index that students have been developing every year for the past three years, i.e. since the Master of Science level elective was first offered.
"Events such as Russia's invasion of Ukraine have highlighted how global companies often prove incapable of managing geopolitical risk," explains Colli. "In this course we combine an analysis of international politics, the study of several sectors characterized by strong competition and an assessment of the behavior of companies under certain conditions, such as wars or dictatorial regimes."
With a total of about 90 students in the course this year, they have the very challenging task "of putting into practice what they learn in class." Divided into working groups, they need to find and analyze data on various political and economic indicators and build an indicator of geopolitical risk by country. All this is coordinated by Gian Maria Mallarino, PhD, who assists Colli in the course. "Through the work on this index, which has data going back to 2011 and thus show the trends of the various countries over time, students learn to identify the different categories of risk. They also think about which subcategories need to be investigated in order to understand what impact the geopolitical context may have on companies," Colli continues.
This awareness of the strong impact of geopolitics on countries’ economies has also prompted Elisa Robinelli, a student attending the Master of Science in Management with a focus on fashion, to choose the Geopolitics for Business course. "Today companies need to understand what is happening at an international level," she explains. Working with her group, part of her project included sending a survey to about fifty Italian companies, investigating their awareness. "This assignment helped me understand how Italian companies think and operate, as well as how much work still needs to be done on these issues. Everyone knows about geopolitical risk, but few are really dealing with it." The work in class, "has therefore become a way to better interpret theory through practice, especially for a complex field such as geopolitics."