GRI Summit 2022
Professor Janice Stein discussed geopolitical risk from the recent Russian attacks on the Ukraine. She mentioned that geopolitical risk is incredibility hard to assess. Even the well-resourced American intelligence community has a track record of being faulty on many events in the past, despite mainly being on point with the recent Russian-Ukraine conflict. To do a good risk assessment is very challenging in a world of uncertainties as the underlying probability is almost unknown.
Prof. Stein views the biggest challenge is how the Russian-Ukraine conflict will likely evolve, particularly how it is likely to escalate. The outrage from the global public has put tremendous pressure on western leaders, making it virtually impossible for them to stand aside.
On the issue of sanctions, she outlined how they are not designed to work in real-time. However, they impact forward economic forecasting and may influence a leader’s battlefield behavior. The western economic sanctions on Russia will have a diverse array of impacts on its financial system and critical global supply chains related to crops, energy, etc. An unexpected response this time around has been that many global companies have withdrawn operations from Russian after revaluating their business risk to avoid reputational damage.
When it comes to China’s position in this conflict, Prof. Stein points out that Russia has become highly dependent on China for an economic rescue. This is due to the massive, contracted trade volume between the two countries. Therefore, in her opinion, doing nothing could be the least risky and damaging strategy for China.
An additional consequence of the invasion is that a large agenda of global issues, including climate risk initiatives, has been suspended. However, due to the size of Russia’s economy, it needs to be included and engaged in those conversations to move these talks ahead.
Janice Gross Stein
Belzberg Professor of Conflict Management in the Department of Political Science and
Director of the Munk School of Global Affairs & Public Policy at the University of Toronto.