Corporate Finance
Professional Legal Services
Full Credential Description
In early 2022, an Asia-Pacific financial firm sought assistance from EY-Parthenon’s Geostrategic Business Group (GBG) to navigate the complexities arising from geopolitical tensions, particularly between the US and China. The firm was concerned the potential impacts of these tensions on capital flows, liquidity, and currency volatility, and needed to develop scenarios to understand the business implications of various outcomes. The geopolitical landscape was rapidly evolving, with events such as the war in Ukraine adding urgency to their need for strategic insights. The GBG team conducted extensive qualitative research, including interviews with subject matter experts and historical analysis of financial market reactions to geopolitical events. This research culminated in the development of five potential scenarios, three of which were explored in detail. For each scenario, the team outlined possible developments, key drivers, international responses, and the financial implications for the client. They facilitated workshops with the firm's senior leadership to discuss these scenarios, assess risks, and strategize on how to enhance resilience against potential geopolitical shocks. As a result of this engagement, the financial firm gained a framework for monitoring US-China geopolitical tensions through identified signposts, such as economic indicators and political actions. This allowed them to proactively adjust their financial structure or capital in response to changing conditions. The GBG's work not only prepared the firm for specific scenarios but also fostered a culture of resilience, enabling them to better respond to unforeseen events in the future. Ultimately, this strategic foresight contributed to the firm's long-term stability and operational effectiveness in a volatile geopolitical environment.
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