The 5 Ds of Financial Risk

  1. Deglobalization. Concerns over national security, lack of opportunity for blue-collar workers, and vulnerable supply chains are pushing many countries, including the US, to rein in the virtually unrestricted cross-border flow of capital, goods, expertise, and people that’s been the norm since the 1980s.
  2. Digitization. Pandemic-related innovations like remote work and telemedicine are here to stay and will spread to other areas of the economy, offsetting to a degree the higher costs associated with deglobalization.
  3. Decarbonization. Forty years too late but better late than never, humankind has begun moving from fossil fuels to sustainable energy sources. The transition will be inflationary and take decades, but the alternative is collective suicide.
  4. Destabilization. The political order established after the fall of the Soviet Union in 1991 is giving way to one in which liberal democracies, including the US, most of Europe, most Commonwealth countries, and parts of east Asia, align against authoritarian regimes. This is bound to cause often-unanticipated commodity shortages and price shocks, a current example being the surge in wheat costs due to the Russia-Ukraine war.
  5. Demographics. As Baby Boomers and Gen-Xers die off and Millennials and Gen-Zers replace them, changes in living patterns will doom some businesses (will fountain pens even be a thing after King Charles goes?) and invigorate others.
President Biden tours a Ford electric vehicle factory in May 2021.
President Biden tours Ford Motor Company’s Rouge Electric Vehicle Center, May 2021. When it comes to deglobalization, mainstream Democrats and MAGA Republicans have more in common than they like to admit.

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Andy Goldblatt

Andy Goldblatt

Former Risk Manager at UC Berkeley, author of four books, ectomorphic introvert.