Elections May Change Business Plans: Everstream Analytics Pinpoints 2024’s Biggest Risks

In 2024, more voters than ever before are heading to the polls as elections take place in at least 64 countries, plus the European Union. These political changes create quite a lot of uncertainty when it comes to supply chains in today’s global economy. Everstream Analytics monitors supply chains and potential disruptions worldwide, and issued a report earlier this year detailing some of the biggest election-related risks. I spoke with Everstream Global Director of Intelligence Mirko Woitzik to look at some of the biggest risks, and how companies are handling them.

This interview has been edited for length, clarity and continuity. An excerpt appeared in Sunday’s Forbes CEO newsletter.

In terms of supply chains and commodities, where do you see the biggest areas of uncertainty in this next year?

Woitzik: There’s so much uncertainty. We’ve already seen quite a number of elections, [and there are] a lot of elections coming up: India, Mexico, and down the line the U.S., potentially the U.K. as well. When we think about commodities, they’re obviously very far down the supply chain. When you speak [about going] from the mine where minerals are sourced, to the product, it’s very intransparent. The first recommendation that we always provide to our customers is to create an entrance to transparency: Knowing where your raw material comes from, how it gets transformed into semi-finished goods, and then how it ends up in the revenue-generating products that our customers produce, whether it be iPhones, or TVs, or cars or medical goods.

This year, India is a top contender. There’s a lot of sugar coming out of India, which is now the second-largest exporter of sugar. Sugar is in everything from soft drinks to other drinks to consumer goods that you see that you see on the shelves. India has been restricting exports for a number of years now to create more stable domestic prices. That has already created the highest sugar prices in years, so that makes everything that uses sugar more expensive. That could continue if the current government is supported in the elections.

Mexico is another big contender. Mexico has been investing quite a bit in several mining capacities. They have been quite strict about foreign investment into mines in Mexico, and they’ve been quite critical—the environment is really more domestically oriented than [welcoming] foreign capital. For everybody that’s already operating in Mexico that is a foreign company, there have been instances where if permits have not been continued, have not been prolonged, and not been extended, there’s still a lot of policy against that.

And then Argentina. Argentina is really big in soybeans, really big in corn as well. Any kind of agricultural goods that are coming out of Argentina are also going to be under scrutiny now with the new government coming in and setting up their own policies. There’s a lot of uncertainty when it comes to really important agricultural goods and how some prices could still increase further this year.

What about the supply chain itself, as raw materials may go to another country to be processed in an intermediary step, and then exported a second time? Are they more vulnerable to cyber attacks?

The focus early on, I would say like 10 to 15 years ago, with cyber attacks was more on state entities being disrupted. Then, it has been more on cash flow-friendly sorts of companies that have a lot of money, that can afford to pay ransom. But now it has moved down to very individual manufacturing actors that nobody really knows. Everybody understands how the supply chain operates now. You don’t have to attack a big company to get a lot of money. There’s a lot of intermediate steps, and they’re all very critical in the supply chain. We see a lot more cyber attacks on manufacturing in general, and a lot of Tier 1 and Tier 2 suppliers that are critical in the entire supply chain. These companies are not very consumer-oriented companies; they’re B2B businesses, and there’s a lot more focus on [disrupting] these types of companies. For example, the ones that produce chips, semiconductors. We typically don’t know them unless they’re quite famous, but there’s a lot of specialized ones, and chips are in everything at the moment.

Logistically speaking, the U.S. government has been quite focused on ports. The[re’s] risk [with] cranes coming from China—it’s a technology that is used in a lot of different U.S. ports. In general, I would say airports, border posts, rail, trucking, all of these are key logistical hubs or players that are very vulnerable to attacks. If you shut down one port, that can have a big impact. We’ve seen it with a lot of cyber attacks. It’s happened [after a bridge collapse] in Baltimore recently, that has had an impact. If you attack one critical system that is used by many different ports, you can take out a number of those ports. There was a precedent in 2017, where one of the big port operators was affected in Europe, and then in the U.S., and all of their terminals worldwide were shut down for a number of days. That is a hugely impactful event that can disrupt supply chains even more than anything local.

Cybersecurity threats seem to be ever-present. Are these threats increasing any this year because of all of the political change that might be happening around the world?

There’s a lot of important countries that are holding elections. We talked about India, Mexico, the U.S., Taiwan, Argentina. These are not small countries, economically speaking and politically speaking. Any event—if we think about the U.S. ports, for example—if there were to be an attack, that can have an impact on the election outcome. There’s a much bigger threat because anything could influence the election outcome in the end. The U.S. could be seen as vulnerable. The U.S. could be seen as not doing enough to counter certain bad actors around the world. And so, whoever is in charge—whether that’s the previous administration, or this one, or the next one—the question is always, ‘Have you not taken this seriously?’ ‘What have we done to counter it?’ or ‘What have we done against it?’ That will be the same for Taiwan, for India, for Mexico.

There are global elections all the time, and there are years that happen to have more than others. How does 2024 compare to some of these other big election years in the past? Does this year potentially have a bigger impact?

Everybody’s always talking about how many people are voting. I think a lot of that comes down to India, because there’s [more than] 1 billion people in India, so that obviously has a big impact. But I would also say, in terms of geopolitical tension, that India is not the India from a couple of years ago anymore. India has been courted by many different global powers, including the U.S., including China, including Russia.

Mexico has evolved as a key actor ever since Covid as a key new supply chain destination for investments, for companies wanting to go out of China and have a sort of ‘China plus one’ strategy. So India, Mexico, Taiwan have emerged as really important players in the supply chain. The combination of those countries having elections—and then you add the U.S. to the mix.

Then Taiwan, which has been so critical ever since Ukraine has been invaded. Everybody’s talking about it, especially since [Chinese military aircraft crossed a Taiwanese boundary line last month]. What’s the U.S. going to do? How does Taiwan fit, looking at the whole China-Taiwan triangle. The importance of Taiwan, everybody has recognized ever since the semiconductor shortage, since Covid.

I think adding all of that to the mix really makes for a potent year, I would say, this year.

You mentioned Covid, which scrambled global supply chains a few years ago. Then we’ve had the war in Ukraine, which caused a lot of disruptions. And then there are the tensions in the Red Sea now that are making shipping difficult. How many more changes should businesses expect due to these elections?

Mexico, Taiwan, India, but also Indonesia, just had elections, and all of these countries are key to the new supply chain strategy since Covid, to reduce the risk to rely too much on China. Those four countries have emerged as some of the key contenders to get a bigger share of supply chain investments. Now that these countries are facing elections with that potential political uncertainty, it makes for a lot of business continuity planning and scenario planning on the company side.

It’s not necessarily clear that there will be a big upset this year. In terms of the agility and the resilience, companies have been more prone to do the right planning because they had to adjust to a lot of different crises, and they want to be well-prepared. That’s why, also, nobody’s taking the risk of just letting the elections go and pan out as they are. Everybody’s making contingency plans.

What should businesses be doing to make contingency plans now?

In general, not putting all of your eggs in one basket, right? That’s really the strategy that, ever since Covid, a lot of companies have been trying to diversify their manufacturing operations, but also diversify their sourcing operations. If you still source everything from China, that doesn’t make you more resilient just because you’re producing again in the U.S. You’d also need to see that you’re sourcing from geographically different areas, that make you less prone to certain disruptions in one area. A lot of companies have to try to find alternative vendors, alternative suppliers, from different regions in order to just not put all their eggs in one basket.

Another strategy that has emerged in the last couple of years is identifying the critical components that are so important for your main products that you’re producing. What are the key critical components that you cannot live without, that will really hurt your bottom line. Increase the stockpile, increase the status of the buffer stocks of these critical components, so that in case there is a disruption, you can say, ‘OK, I want to have 90 days, I want to have 120 days, of where I can try to find an alternative solution—but I don’t have to worry about that supply being disrupted two weeks later.’ We’ve actually seen with the Red Sea crisis, everything takes longer now, and we’ve seen manufacturing shutdowns in Europe because sometimes these supply chains are still so just in time, that two weeks without supply would basically halt production lines. Some companies have started to do this very early on since 2020, and they have a much larger buffer stock so they can basically bridge the gap until they have another solution in place.

Looking ahead, as geopolitical tensions intensify everywhere, is the question of election outcomes going to perpetually be an issue that can interfere with supply chains?

There’s definitely different challenges, but I think there’s a lot of uncertainty as well, maybe for different reasons. For example, in Europe, a lot of different countries right now—Germany, but also France—there is a shift to the right, I would say. There is concern: What is the economic policy [for] more right-wing parties, and sometimes even the far right. We’ve seen it in Italy already. There’s different countries, there’s different sorts of risks and different reasons for it being such a big question mark. I would definitely say that you’re right in the assumption that there’s definitely not an election that nobody is concerned about the implications of, because every industrialized country and a lot of the developing countries are facing unique challenges in this global environment.

One trend is very similar: Everybody’s very focused on industrial strategies. There’s a lot of trade restrictions being implemented. Everybody wants to focus on supporting their national economy, whether that’s in the U.S., or whether that’s in France or Germany or Europe. That’s a key component that has not been so widespread, I would say, five years ago. Now, governments are trying to support their economy with subsidies, or just less competition from the outside: more rules, more regulations. I would say supply chains are in for more fragmentation, bigger fracturing, and having to adapt to those decoupling. Different regions will have different rules, and so they will have to just adapt to that, and maybe produce locally and manufacture locally, and just deal with a lot more regulations than before.

Some of these political shifts have been ongoing for several years. Do you think that most companies are more easily adapting since it’s been on the horizon, or they have options already open just in case?

Absolutely. I think it’s definitely easier for a larger multinational that has several manufacturing operations in different parts of the world to hedge their bets and shift production of certain products from one region to another, than for a small or midsize company that operates out of the U.S., and Germany to adapt to it. You’re obviously much more exposed to anything that would happen. I think there’s definitely an advantage to being bigger and having more global operations.

But even, I think, as a smaller company, if you have a lot of transparency in your supply chain, and you know where your problems might arise and where your biggest risks are, you still have a lot of advantage. That’s why a lot of companies are investing in risk management, especially supply chain risk management, because they see it now as a competitive advantage over their peers or their competitors. They just see that transparency and visibility gives you a lot of options, right? Because if you don’t know, and then all of a sudden you’re exposed to Ukraine or you’re exposed to the Middle East or you’re exposed to Taiwan and you have no idea, then it’s almost already too late. Once the disruption happens, you’re kind of scrambling to find solutions. But if you plan 12 months ahead, then you have a lot of different options to explore.