National Security - A Strategic and Operational Risk

September 21, 2022
# min read
Janice Giannini

With the accelerating changes in technology, cyber-security, and geopolitical tensions, the question arises are US company Boards addressing National Security as a significant risk? Or perhaps the better question would be: how do Boards need to address the impact and opportunity of the interdependence/ intersection of technology, cyber-sec, and geopolitics comprehensively? 

We have lived in an unprecedented time of 'relative congeniality" for 30 years with the fall of the Soviet Union, détente, and a less aggressive China. Nevertheless, we must contemplate the increasing reality of shared business power with cultures vastly different from ours. In some cases, these other cultures may not desire to be collaborative ,potentially creating a critical imbalance that is not in the US's favor.

As we confront the reality that we no longer live in that "relative congenial environment'; how might the governance structure and function evolve to address this? I offer the following lenses tospur the conversation:

To what extent do US companies need to be active influencers and players in our national/global security?

There is a robust global supply chain for valid business reasons. That is currently working to the US' disadvantage in some cases. How do BODs need to consider this as part of the strategic plan? What is the risk profile for your company?

With the blurring of commercial and military applications, if the US strengthened and tightened export control, how vulnerable is your enterprise? What plans need to be put in place now to protect our national assets and potentially land softly if the conflict escalates?

Given the US dependence on many non-national materials, does it need different and more significant stockpiles? Does it need to define an acceptable risk profile and then start the drift in that new direction? How would your company be affected?

In what areas is it advisable to prioritize technology investment to lessen dependence on natural materials from potentially hostile nations? How would your company be able to help or grow in this area? Do we need synthetic materials to reduce the risk?

What is individual and company strategic responsibility for national security? Is it worth a penny per share or .1 cents per share? How do companies balance short/ mid, and long-term benefits? What is NYSE and NASDAQ's responsibility for guidance and evaluation?

      > Other strategic questions that arise as one looks through a national security lens:

      > Location and level of participating in investments and joint ventures abroad

      > Does the company benefit financially from these other entities through sales, BOD joint members, or?

      > Are we helping our greatest adversaries and allies to succeed at the expense of the US? Where is the line between acceptable and too high a risk?

What is the beneficial outcome of defining and discussing applicable scenarios to understand and plan/respond accordingly?

 

This article addresses the US perspective. The content applies equally to all parties. Many entities are already addressing National Security as a strategic and operational risk in their plans. Many are not.

What are the appropriate actions your enterprise needs to take? And when does that need to happen?

 

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