By far the biggest risk for any CFO is the rise of China, which will be the largest economy within 10 years. It is already the most important and powerful economic system from a governmental perspective, because unlike the U.S., its economics are driven by the government. And the Chinese government is writing big checks, developing long-term strategies, building an international architecture, and promoting its own standards.
All the CFOs we’re talking to right now are used to living in a world that is basically a global free market, promoted by the U.S. and our allies. Now that system is under strain for many reasons, but the most important is the fact that the Chinese do not support a free market. They’re state capitalists and authoritarians, and they’re increasingly saying we want a global system that is aligned with us.
This means we now live in a hybrid global economy, where sectors are more strategic and where you have to work with governments if you want to have access to some of those marketplaces.
Another area of significant risk right now is the breakdown of the JCPOA, known commonly as the Iran nuclear deal, and the likelihood of a significant spike on oil prices as a consequence.
And cyber is a big risk—specifically cyber emanating from Russia and its willingness to undermine economies around the world. We saw that with Ukraine—the Russians took almost one percent off Ukraine’s GDP with the NotPetya attacks. They are clearly inside critical infrastructure across the United States and Europe, and the U.S. continues to expand sanctions against the Russians to no effect.