By David Born and Christian Krys

In Trend 2 of our Trend Compendium 2050 we analyze trends in the political sphere. We look at global risks, geopolitics, and the future of democracy.

Global risks: Decision makers’ risk awareness shifts to environmental and technological risks

In contrast to previous years, decision makers’ awareness of global risks under a long view has shifted from the economic to the environmental, followed by technological and societal risks. For the decade ahead, half of the top 10 risks is concerned with effects stemming from climate- and nature-related challenges such as extreme weather events, climate tipping points, biodiversity loss, water and food shortages, and pollution.

Concerning technology risks, mis- and disinformation and their divisive influence on society and politics is felt more acutely for future years, as are risks stemming from cyber incidents, such as cyber attacks and data breaches. Societal polarization as well as challenges arising from migration trends are growing concerns for many western countries.

Geopolitical challenges abound: The future of the global power balance is in a state of flux

Geopolitical rivalry is reinventing itself by undergoing a global reshuffle. Powerful new, enlarged, or re-invigorated players – think SCO, BRICS+ or NATO – are changing the mix, vying for dominant positions in the global arena.

While geopolitical flashpoints abound, global players seek new realms quite literally everywhere: the Arctic is becoming a zone of strategic competition regarding resources but also as a more likely trade route due to climate change. Deep-sea mining is another battleground where precious claims are staked, motivated by future returns from the insatiable global demand for metals and minerals. Space is equally turning into a new geopolitical arena, as the substantial growth of satellites used for military purposes attests to its growing significance beyond more peaceful, scientific and economic endeavors.

Back on Earth, the number of violent conflicts has risen as has the number of casualties. The use of hard power is evident in plain sight. Persistent and emerging geopolitical flashpoints threaten the political stability of nations and entire regions. Conflicts, tensions, and regime changes cause humanitarian crises and suffering.

Soft power exerted via trade sanctions will continue to play an important role in managing conflict through non-military means. At present, nations appear to be pursuing selective strategies that offer specific advantages rather than aligning themselves with a bloc.

Future of democracy: Democratic erosion is on the rise 

The decline of democratic traits accelerates: Autocratization trends and public dissatisfaction with democracy are rising developments in many democratic countries. Dissatisfaction is more pronounced in younger generations than in older generations. Many citizens in democratic countries believe that the political system needs to be comprehensively reformed. To strengthen the future of democracy, participatory citizen engagement is key.

Globally speaking, 2024 is a super-election year and thus a real test for democracy as a form of governance. Democracy depends on trust in political institutions. Yet especially trust in national government is generally low. In Europe, the increase in populist parties' vote shares over the past two decades underscores a deepening divide in public sentiment.

The future of democracy lies in the accountability of its leaders, the protection of fundamental freedoms, a free media, and a strong and engaged citizen voice. Globally, voter turnout has been declining for years although nationally the picture varies.

Nowadays, participation in the political process beyond the ballot box takes place digitally: Public opinion is increasingly broadcast, shared, and formed via social media and online platforms. Meanwhile, world leaders in liberal democracies are united to combat democratic backsliding and authoritarian trends.

How companies can take advantage of megatrends

Since global risks are inherently dynamic, they can affect companies in multiple ways – operational, regulatory as well as reputational challenges need to be understood and mitigated. Following a three-step approach helps: Identifying risks at the right level – thinking global, regional, local; herein, scenario planning rounds out the long view on global risks. Then, assessing the impact of risks on the company’s strategy and business model. Following through by implementing measures to manage identified risks – this includes monitoring as well as drawing up action plans. These enhanced risk management capabilities can help leverage new opportunities.

Cyber-attack risks are increasingly likely for businesses and require extensive preemptive planning and just-in-case support structures inhouse as well as through external experts; continuous cyber incidents training at all levels is key.

Equally, climate related risks are no longer up for debate – they just require better planning. Decision makers need to design an economic model for climate adaptation, factoring in climate effects along their (national and international) supply chain as much as those at headquarters. Climate-smart investments, that are often open to state co-financing, are crucial.

Without a doubt, the geopolitical landscape is changing; corporate strategy needs to factor in ensuing volatilities, tensions and shifts among global powers and new alliances. Geopolitical scenario thinking and risk assessments can act as guardrails in uncertain times.

Mis- and disinformation are about awareness as much as intent. Business leaders need the best possible information for planning and strategy. At all levels, fact checking should be embedded in the corporate culture as standard, as should media literacy training where necessary. Clarity in communications builds trust and developing policies to support this is helpful to companies and all stakeholders.

Increasingly, employees, customers and other stakeholders expect companies to take a stance when it comes to democratic values. Consistency of a company’s stance and its actions as well as a nuanced dialogue are key, even more so for international companies.