Seminar – Geopolitical risk and scope change

The current academic and media debate suggests that corporations are now confronted with increasing risks, especially from (global) political actors. These actions generate both direct geopolitical and policy-related economic risks. However, risk indicators reveal divergent developments over time. While economic risks triggered by policy actions exhibited an increasing trend in recent years, geopolitical risks are characterized by sudden spikes rather than a steadily increasing trend, thus pointing towards an unclear and diverse risk environment whose effect on corporations needs to be distinctly analyzed. The current scholarly debate about “bifurcation” or “de-globalization” highlights the role of portfolio management as one form of strategic risk management. However, recent contributions solely focus on the investment side stemming from one type of risk, leaving the divestments and other kinds of risk aside. For a comprehensive understanding of corporate reactions to different risks, it is necessary to take on a holistic view of all corporate actions in their geographic and product scope. This research aims to provide these insights by utilizing a sample of 163 German HDAX corporations from 1985 until 2023. By computing company-specific portfolio risks, the analysis accounts for firmindividual risk exposures, enabling a more precise assessment of individual corporate risk situations. Eventually, insights into reaction patterns to different forms of external risks will be derived to enhance the academic and practical understanding of corporate risk reactions.

Hybrid from REC M4.02