Addressing diversity in the political risk field

And what to do about it

Any organization benefits from bringing diverse perspectives to the table. Extensive research has demonstrated that diverse teams are more likely to be creative and better at problem-solving and that diversity on boards and executive teams often correlates with increased profitability.

Diverse teams benefit organizations in multiple ways.

• They are more likely to question assumptions and challenge biases.

• They provide a broader range of information and life experience.

• Diverse teams are more likely to understand a range of potential customers and clients, effectively respond to social or political change, and mitigate reputational risk.

Diversity is particularly important to political risk.

Any assessment of risk should draw on multiple perspectives as a way of thoroughly informing the assessment, challenging assumptions, and questioning biases. Many people in the political risk field can offer examples of situations in which including the perspectives of a woman, a member of a racial minority group, or a political viewpoint could have helped improve analysis or manage reputational risk. This raises a few questions anyone working in this field should be asking:

• Is political risk failing to achieve sufficient diversity needed for quality analysis?

• Is it hampered by the narrow pool of talent and similar worldviews of its analysts?

• What does that mean for those who rely on the insights of companies and consultancies that may be blinkered in their thinking?

• And, if political risk is not diverse enough, what should be done about it?

A broad approach to diversity

When people think of diversity, they often first consider traditional demographic markers such as gender, race, ethnicity, and nationality. Ensuring that teams – including leadership teams – include gender, racial, and ethnic diversity is a foundational starting point and a natural focus for many companies.

There are other factors to consider, as well.

For example, research has found that political ideology on boards and among CEOs affect how company leaders approach multiple different business decisions and assess risks; diversity in ideological viewpoints can help to ensure a more balanced approach. There are many aspects of diversity, including educational and professional background, gender and sexual identity, lifestyle preferences, marriage status and parenthood, physical challenges, culture, age, language, and much more.

Diversity in the political risk field

The political risk field historically has been very male and White and drew heavily on a specific pedigree. Companies operating in the space have made important progress in recent years, especially in terms of gender, but the field has a long way to go in order to represent truly diverse perspectives.

While the field has long been male-dominated, political risk firms and teams have made significant progress in the last five to ten years. A look at several companies’ analyst teams shows that men still constitute a majority of staff, but women are somewhat well represented. However, senior advisors and leadership teams tend to have far less gender diversity.

Some women who have been in the field for several years have seen progress. In particular, many companies have seen a shift in tone on the issue of gender diversity. Only a few years ago, many managers paid little or no attention to the issue, and women in the field have stories of bosses expressing skepticism about efforts to advance women. Today, that has changed to some extent, and many companies now work harder to support women’s advancement into management positions.

The field has long been more diverse in terms of nationality. Given the focus on global risks, many companies have long recruited analysts and contributors with language skills and experience in different regions of the world. This has provided some natural diversity in terms of nationality and language, though many still have US, British, or European citizenship.

The diversity of nationality, however, has had limited impact on racial diversity. There is some ethnic diversity in the field, but a look at leadership and analyst teams clearly demonstrates that the field remains very White.

The global racial justice protests following the May 2020 murder of George Floyd has highlighted the importance of racial diversity within the field. The movement was sparked by a single incident, but grew because of millions of peoples’ experiences of discrimination that led them to join protests.

Yet the political impact of that movement was being analyzed by people who disproportionately had not lived those same experiences.

Could it be analyzed correctly? Of course? Would it be more likely to be analyzed correctly if the analyst teams were more diverse? Probably.

Some companies are looking closely at this issue for the first time. Increasing racial diversity is likely to take time and effort, but at least some leaders in the field are now taking it seriously.

Political risk firms and teams strongly tend to recruit from a pool that is very limited in terms of education and background. The field particularly draws on graduates from the London School of Economics and Political Science, the University of Oxford, and the University of Cambridge. Sciences Po is popular among the continental European universities and Georgetown University in the United States.

As these universities tend to act as filters for educational and other characteristics, the pool on which political risk teams are drawing is narrow. It excludes the perspectives of many other people who may have attended other universities, studied outside of the United States and Europe, or come from a more diverse range of socio-economic backgrounds.

The issue of diversity in educational and socio-economic background is tricky and clearly not a priority for most political risk leaders. Furthermore, the reliance on a narrow range of universities serves a purpose in recruitment. Graduates of these universities are assumed to be intelligent, knowledgeable, and skilled in critical thinking. Interpersonal networks formed through university studies are often useful for recruitment. Clients often expect that consultants will have a prestigious educational background.

These are understandable realities, but they limit the range of experience and viewpoints within the field. With educational polarization increasing, it also means that the quality by which we hire analysts is a quality that also shapes their own political viewpoints. This is not to say that we should choose political opinion as a metric by which to hire analysts, but it a simple demonstration that choosing only those with the fanciest degrees as our analysts could have hidden consequences we don’t anticipate at hiring.

There are many other types of diversity to consider. For some companies, especially in Europe, sexual orientation is a factor in promoting diversity. Life experience such as parenthood can add to a team’s understanding of the world. HR managers and company leaders might consider professional backgrounds that offer relevant skills while contributing new experiences to the team. The political risk world tends to be strongly based in London and New York City, with some additional cities around the world; seeking to recruit beyond these urban centers would help to expand perspectives on a team as well as potentially helping a company diversify its client base.

Beyond staff, political risk teams also should consider diverse representation on panels at conferences and workshops. Panels often lack diversity in political viewpoints, which can be very problematic when trying to fully understand a country’s political risk. The movement against “manels” – panels that include no or relatively very few women – has highlighted another area of expert diversity, or lack thereof. These manels do little service to the audience who expect to see a debate and instead are witnesses only to groupthink.

Challenges and recommendations

Expanding diversity requires resources and attention. Larger companies tend to have some advantages, while the challenges can be greater for smaller firms.

The pipeline for recruits is a major challenge for many companies. Political risk jobs have specific qualifications. Often, these qualifications filter out talented candidates from diverse backgrounds. Promotion pipelines present challenges, as well. While political risk firms are capable of hiring from foreign countries, visa requirements add complications and costs.

While recognizing these challenges, leaders can take multiple steps to improve diversity.

The first step is recognizing that diversity improves analysis and business operations, then putting resources into developing systems and an environment that is likely to enhance diversity.

Many of the steps necessary for expanding diversity fall under the rubric of HR policies, including expanding the applicant pool and providing mentoring. Diversity training can be a valuable tool, though its quality varies. Rather than relying on a handful of universities to filter applicants, managers could focus more on important skills, such as critical thinking, regional or sectoral expertise, and a business-oriented attitude.

Managers should consider diversity when putting together project teams and especially should try to include diverse team members when engaging in client-facing or public work. Political risk teams should ensure that expert panels include some diversity.  

Fostering a company culture that is welcoming to different types of people is perhaps the most challenging and most important step. While a company culture should value diversity, it should go further to cultivate an environment that is respectful and supportive of employees’ needs, including mental health.

Looking ahead, the increased awareness of gender and racial diversity is likely to bring more perspectives into the field, but this will take time. Shifts to remote work will open more opportunities for hiring people with diverse backgrounds but will require adaptability in nurturing a company culture and relationships. The pandemic also will have long-term effects beyond remote work, including impacts on hiring abroad.