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Anirban Ghoshal
Senior Writer

Geopolitical risks could present new opportunities for CIOs: Gartner

News
Aug 25, 2022
IT Leadership

Gartner predicts that by 2026 about 70% of multinational enterprises will adjust the countries in which they operate by hedging to reduce their geopolitical exposure.

The geopolitics of digital infrastructure and regulation is rapidly becoming an issue that multinational CIOs must step up to lead, according to Gartner.

Gartner predicts that by 2026 about 70% of multinational enterprises will adjust the countries in which they operate by hedging to reduce their geopolitical exposure.

The research firm defines geopolitics as the geographic influence on power relationships in international relations. Presently, IT is playing an increasingly important role in the battle between nations to achieve supremacy in areas such as economics, military and society and this opens up new challenges and opportunities for CIOs, the report said.

“Digital geopolitics is now one of the most disruptive trends that CIOs must address, with many now dealing with trade disputes, legislation coming from one country that impacts global operations, and government imposed restrictions on the acquisition and use of digital technology,” Brian Prentice, vice president analyst at Gartner said in a statement.

About 41% of boards of directors in enterprises, according to a survey spanning 273 respondents across US, Europe and APAC, viewed geopolitical power shifts and turbulence as one of the biggest risks to performance.

Data sovereignty will be a key focus area for CIOs

Some of the key focus areas for CIOs, according to Gartner, are digital sovereignty, helping build a local technology industry, running a risk center and provide understanding of cyberspace in different nations.

CIOs must be aware of international regulations and ensure that the enterprise’s IT operating model and practices comply with the regulations, Gartner said, adding that their role is to be aware of the legal environment and articulate to other executives how the IT organization supports compliance across the enterprise.

As most governments or administrations look to build a robust local technology industry to circumnavigate geopolitical risks, CIOs, according to Gartner, should use this opportunity to proactively engage with governments.

“They must localize specific initiatives into countries that have the best integration between local expertise and access to government co-innovation support,” the report says.

Geopolitics could impact vendor selection

Another issue that CIOs face due to geopolitics is the restriction of using certain technologies or vendors in a country due to its policies supporting the digitization of national military and security operations.

These policies can lead to CIOs being mandated to buy from certain vendors.

To get around the issue, CIOs must establish a vendor and technology risk center of excellence, chartered with a regular assessment of the exposure of key suppliers to evolving government restrictions, the firm said.

Further, CIOs will have challenges from phenomenon such as national competition for control over the governance of cyberspace as it might impact operations of multinational companies.

Although CIOs can’t have much say over governments in this matter, Gartner said they can advance the executive team’s understanding of cross-national competition for control over cyberspace and the impacts to their enterprise’s operations by leading an annual cyberspace environmental update briefing.