We live in an increasingly politics-first world. From wars raging in Ukraine and Gaza to recent change elections in the United States and throughout Europe, the political environment grows more uncertain by the day. With trade wars, transatlantic tensions, and further anti-incumbency elections on the horizon, political instability promises to be the new normal.
At the same time, bigger issues like global artificial intelligence governance and dealing with the worsening effects of climate change seem beyond political solutions. With nationalism, populism, and short-term policymaking in vogue, these challenges will only grow in the coming year.
There will be no harbour from the tempest of political risks for any organisation in 2025, let alone international associations.
“The political environment is forcing a moment of reflection for how associations should engage, which I think is long overdue,” said Tausha Michaud, Senior Vice President for McMillan Vantage, a Canadian public affairs firm. “What might have felt uncomfortable a few years ago needs to be the way of doing business going forward.”
So, whether considering advocacy, geographic expansion, or events, international associations must think differently about political risks to successfully navigate this volatile world. But how?
Risk definition & categorisation
Risks are uncertainties, nothing more. Almost all risks, political and otherwise, can have either positive or negative implications depending on various contexts. Only rarely are risks considered pure risks, or risks with only negative consequences. Think construction sites and COVID-19.
Within this context, political risks can be sorted into four categories:
- Geopolitical risks: When the interests of countries collide or when the international system is undergoing transformation. (e.g., the Ukraine war)
- Country-level risks: When the national political environment or governmental and institutional stability has significant consequences for organisations operating in that country. (e.g., Brexit)
- Policy and regulatory risks: When governments – at the international, national, or local level – change existing law, policies, or regulations in a way that impacts organisations and markets. (e.g., China’s foreign NGO law)
- Societal risks: When groups launch public activism such as boycotts or protests that have consequences for markets and organisations operating globally. (e.g., flight shaming)
Not all political risks are created equal, nor are their impacts. That’s why associations should consider the potential short-term, medium-term, and long-term consequences of risks identified across all four categories, both on discrete offerings and the organisation as a whole.
For example, while climate change may have a minimal near-term effect on congress attendance, it might cause associations to move away from a single global event towards smaller regional meetings over the long-term. Alternatively, while expanding a certification programme to the fast-growing Middle East may require near-term investment, it could lead to significant medium and long-term financial growth.
Martin Sirk, Owner of Sirk Serendipity and International Advisor for the Global Association Hubs Partnership, also proposes four questions for international associations to ask themselves to help determine whether a given political risk will bring about short-term change or long-term impact.
- How likely is the political risk to affect your association’s mission?
- How likely is the political risk to impact your association’s business model and viability?
- How will the political risk impact your members’ lives or business success?
- How will the political risk impact your members’ own feelings or values?
Risk management
Once political risks have been identified, categorised, and contextualised, associations can then begin the process of actively managing them.
“One of the raison d’être of most associations in Brussels is precisely to manage political risks,” said Feriel Saouli, Chief Executive Officer for SEC Newgate EU, an advocacy and communications consultancy also providing trade association management. “For the associations that we work with, managing political risks is absolutely crucial, whether that’s regulatory risks, reputation risks, or trade-related risks.”
To effectively manage political risks, associations can adopt a four-phase framework that encompasses the full lifecycle of political risk management and answers many key questions:
- Understand: What is my association’s risk appetite? Is there a shared understanding of our political risk appetite? How can we reduce political blind spots?
- Analyse: How can my association get good information about the political risks that we face? How can we ensure rigorous analysis? How can we integrate political risk analysis and management into association decisions?
- Manage: How can my association manage exposure to the political risks that we have identified? Do we have a good system in place for timely notification and action? How can we limit the damage when something bad happens?
- Respond: Is my association capitalising on successes and failures? Are we reacting effectively to crises? Are we developing mechanisms for continuous learning?
There are three critical factors for international associations when adopting this framework. First, there must be a clear understanding between the board of directors and staff regarding roles and responsibilities for political risk management. Ensuring clarity up front prevents organisational confusion and potentially futile responses, particularly during times of crisis.
Additionally, “boots on the ground” intelligence is vital. Whether political risk information comes from a volunteer, a chapter, an association management company, a public affairs firm, or paid staff, a contextualised local viewpoint lets associations sense and respond to political developments effectively. It also helps to prevent a ‘scream’ somewhere in the world from being a ‘whisper’ by the time that it reaches an association’s headquarters.
“The keys to international success are foresight and flexibility,” said Jeffrey Smith, Chief Operating Officer for Factum Global, a Washington, DC-based global expansion consultancy. “Whether it’s managing political risks or economic shifts, being locally connected and having an adaptive framework will increase an international association’s likelihood of achieving its goals.”
Finally, today’s volatile environment requires the ongoing management of political risks. While this has always been important for association lobbying and advocacy efforts, the high-stakes impact of political uncertainty across a range of association activities means that association leaders and their boards cannot merely tick the box once a year and consider the job done.
While political risks will continue to reshape the world, associations who are proactive, flexible, and resilient will continue to find ways to grow their relevance and impact in 2025 and beyond.
To download the ASSOCIATIONWORLD political risk management model, please click here.