Notes:

• The New Risk Environment: Geopolitical tensions (e.g., US-China trade wars, Russia-Ukraine conflict, Middle East instability) have created a volatile backdrop for global business.
• Supply Chain Resilience:
  • Single-Point Failures: Boards must assess the risk of over-reliance on single suppliers or regions (e.g., “just-in-time” vs. “just-in-case” inventory).
  • Sanctions Compliance: Ensuring the supply chain does not inadvertently violate sanctions (e.g., OFAC lists).
  • Diversification: Strategies to diversify suppliers and manufacturing locations to mitigate disruption risks.
• Board Oversight:
  • Geopolitical Risk Committee: Some large multinationals have established specific committees to monitor geopolitical developments.
  • Scenario Planning: The Board should engage in scenario planning for potential geopolitical shocks (e.g., war, trade embargoes, currency collapse).
• Disclosure Requirements:
  • SEC rules require disclosure of material risks related to geopolitical events, including their impact on financial condition and operations.
  • Conflict Minerals: Reporting on the source of minerals (tin, tungsten, tantalum, gold) to ensure they do not fund conflict in the DRC region.
• Human Rights: Ensuring supply chains comply with human rights standards (e.g., no forced labor, child labor) under laws like the UK Modern Slavery Act and the California Supply Chain Transparency Act.