Geopolitical Risk

Topics: Decision making, Cognitive map, Decision theory Pages: 13 (3923 words) Published: April 21, 2015
A New Approach to the Analysis
of Geo-Political Risk

Diplomacy
154Taylor
Taylor
FDPS
3
1
2004
10.1080/09592290490886883
39746
DIPLOMACY
xxxxx
0
& Francis
&and
FrancisTaylor
&
Statecraft
Inc.
STATECRAFT
and Francis 325 Chestnut StreetPhiladelphiaPA191060959-2296

PAUL ORMEROD AND SHAUN RIORDAN
QUERY SHEET
Q1: AU: Pls. provide RRH.

FDPS_39704.fm Page 1 Thursday, October 28, 2004 5:09 PM

Diplomacy and Statecraft 15(4): 1–12, 2004
Copyright © 2004 Taylor & Francis
ISSN: 0959-2296
DOI:10.1080/09592290490886757

A New Approach to the Analysis
of Geo-Political Risk

Diplomacy
154Taylor
Taylor
FDPS
1
2004
10.1080/09592290490886757
39704
DIPLOMACY
XXXXX
1
& Francis
&and
FrancisTaylor
&
Statecraft
Inc.
STATECRAFT
and Francis 325 Chestnut StreetPhiladelphiaPA191060959-2296

PAUL ORMEROD AND SHAUN RIORDAN
Traditional geo-political analysis has a poor record. In particular it has problems in capturing the complex inter-relationships between key factors, and the positive and negative feedback loops which make prediction difficult if not impossible. This paper argues that new techniques, derived from complexity and network theory, offer powerful new tools for both analysis and strategic decision making. The paper focuses on fuzzy cogntive mapping. An illustrative example examines the prospects for disintegration in China. Although highly simplified, this example shows how this technique is able to derive conclusions difficult or impossible to achieve through traditional analysis, and its potential for strategic decision makers, whether in the private or public sector.

1. INTRODUCTION
In the deeply inter-connected and inter-dependent world of the 21st Century, effective geo-political analysis is essential, both to governments and multi-national corporations. The speed with which information, and thus risk, flows through the global networks puts a premium on the ability to anticipate future developments and crises and build them into strategic decision making processes. Unfortunately, existing geo-political analysis has a poor record of prediction, even over short time scales. Davies (2003) lists a series of geo-strategic “surprises,” including the collapse of the Soviet Union, the peaceful reunification of Germany and the East Asian Financial Crisis. Furthermore, much current analysis is presented to policy or decision makers as a "black box," which can neither be examined nor integrated into the decision making process (Lempert et al., 2003). We argue that powerful new techniques for thinking about

strategic decisions, drawn from complexity and network theory, should be applied to international political analysis. In particular we examine 1

FDPS_39704.fm Page 2 Thursday, October 28, 2004 5:09 PM

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DIPLOMACY & STATECRAFT

the use of techniques, based on the creation and modelling of cognitive maps (Kosko 1994, 1997), that capture the knowledge held within government, companies and the expert community and formalise it in a way that enables it to form an integral part of strategic decision making processes. Unlike traditional political analysis, these techniques are dynamic, incorporating the complex feedback loops of the real world. They produce a series of scenarios that allow agents to test the robustness of their strategies and also to pose a series of “what if” questions.

Section 2 discusses the reasons underlying the failure of standard approaches, and gives an overview of the dynamic alternatives. We give in section 3 an illustration of the latter, based upon understanding the evolution of political stability in China. Section 4 draws some preliminary conclusions.

2. GEO-POLITICAL ANALYSIS
There is an increasing literature on the nature and weaknesses of existing approaches to geo-political analysis (Lempert et al (op cit) and Allison and Zelikov (1999) provide useful overviews; Riordan (2003) examines the weakness of analysis within the British...
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