Industry leaders instinctively employ a long-held practice from government–strategic intelligence–to make decisions for their business and are now intentionally using this tool to mitigate risk and promote resilience. Strategic intelligence is the dispassionate assessment of numerous factors to arrive at options and scenarios for C-suite decision making, in part through horizon scanning and threat detection methods. This approach is also able to uncover opportunities that can drive growth and competitive advantage.

Pendulum’s guide highlights how negative events can be transformed into lessons learned for future success and continued reduction of danger.

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The Need for a New Approach

National security and industry executives have long used the calculus inherent in strategic intelligence to confront global hazards and vulnerabilities. These same principles can be applied to specific business risks such as, physical security threats, public affairs crises, and supply chain challenges. Strategic intelligence empowers Fortune 250 corporations to arrive at forward-leaning conclusions that give the C-suite choice in the decision making process.

Some examples that illustrate this include:

• Hotel Chains Monitoring Political Instabilities: 

  • International hotel chains with properties in volatile regions often rely on business intelligence to gauge local political climates. For instance, during the 2008 post-election violence in Kenya, hotels used this intelligence to secure their premises and ensure guest and staff safety.

• Operational Disruptions in Shipping: 

  • When the Ever Given container ship blocked the Suez Canal in 2021, many logistics and shipping companies closely tracked the situation through social media updates. These real-time updates, often from individuals on the scene, allowed companies to adjust their shipping routes and strategies swiftly.

• Tourist Industry and Natural Disasters: 

  • In 2018, the sudden eruption of the Kilauea volcano in Hawaii led to a rapid spread of videos and images on social media, allowing travel and tourism companies to assess the situation and advise their clients on itinerary changes, cancellations, or relocations.

• Expansion into Emerging Markets:

  • Utilizing business intelligence to analyze economic trends and consumer behavior, Apple identified a surge in China's middle class during the early 2010s. This insight led them to strategically open retail stores, tapping into the growing purchasing power of the Chinese middle class.
  • After thorough business intelligence assessments of India's e-commerce dynamics and consumer preferences, Walmart acquired Flipkart in 2018. This move allowed them to capitalize on India's burgeoning online retail market.

• Infrastructure and Security:

  • In response to the increasing sophistication of cyber threats, Visa leveraged business intelligence to identify patterns and trends in cyber attacks, informing their decision to implement AI and machine learning solutions. This forward-thinking approach has enabled Visa to detect and counteract fraudulent transactions more effectively.

• Technological Investments:

  • Through insights into transportation trends and technological advancements, Ford identified a shift to autonomous vehicles prompting their 2017 billion-dollar investment in Argo AI, a front-runner in autonomous vehicle technology.
  • Microsoft purchased LinkedIn in 2016 after analyzing professional networking patterns and the rising importance of integrated cloud services, foreseeing the immense potential for synergies between professional networking and cloud services. 
    
    

Limits of Traditional Risk Management

Industry must now confront unparalleled technological advances in AI and the unintended consequences of social media platforms in addition to the conventional threat landscape. The security executive is no longer able to focus on traditional risk management to attack the spectrum of known and hidden peril. Outdated methods lead to serious hindrances, including:

• Siloed Data

  Segmented risk management in areas like finance, operations, or compliance can limit the grasp of how risks are interconnected. This narrow view often leads to an incomplete evaluation of the broader risk landscape. 

• Inadequate Response Times

  With the rise of social media, global supply chains, and geopolitical complexities, risks can surface overnight and have far-reaching consequences. Traditional methods do not offer the agility to respond quickly and decisively to dynamic threats.

• Reactive Responses

  Historical risk management methods are overly oriented on event detection and what is happening in the moment that is also generally very acute. They struggle to address and analyze risks that have already occurred, are unfolding, or come from unexpected or non-traditional sources.

The Changing Role of Risk Analysts

Corporate risk practitioners are operating in environments filled with instability and added responsibility beyond the usual security parameters, transitioning more as business advisors. In these hybrid roles, they are consuming sources focused on real-time events that–while key for quick-hit reporting–do little to advance the analyst’s understanding of how issues such as, brand and reputation management, relationships with unions, or insider threat coalesce within a risk framework. They and their management require a sophisticated instrument to support missions in identifying dangers and unpacking the meaning of those dangers for the business.

Risk analysts are inundated with vast amounts of information daily and require advanced tools to sift through it effectively. This ensures they pinpoint crucial concerns affecting various business sectors. Interestingly, the perception of a threat can differ even within the same organization. For instance, while the operations team might shrug off an issue, it could send alarm bells ringing in the branding department. Hence, for today's risk analysts, gaining a comprehensive view of public sentiment, reports, and readings is paramount to their success.

Case Study – Bud Light’s Controversial Influencer Partnership

Analysts must help their corporations deal with how quickly issues can become amplified and scrutinized in the public eye. Proper preparation, real-time tools, response mechanisms, and a commitment to learning can help navigate these complex situations. 

A case in point:

Bud Light's Controversial Partnership (2023)

Background: Bud Light partnered with transgender and TikTok influencer Dylan Mulvaney for their Easy Carry Contest in early 2023.

Trigger: The collaboration drew criticism from a segment of Bud Light’s consumer base, who perceived the company's move as excessively "woke."

Social Media Reaction:

• • Opposition: Many consumers expressed their disapproval of the collaboration on various social media platforms. 
  • Loss of Support: Although there were supporters who initially applauded Bud Light's inclusivity, the brand's failure to quickly defend their decision or Dylan Mulvaney among negative backlash hindered support. 

Economic Impact: Anheuser-Busch reports they lost $395 million between April and June as a result of boycotts and that their revenue in the U.S. dipped 10.5% compared to last year.

Lessons Learned & Future Implications:

• • Anticipation: Brands must anticipate potential divisive reactions to their partnerships and campaigns. In this case, Budweiser could have anticipated backlash from their core, hardcore, market.
  • Diverse Feedback: Before launching a campaign, getting feedback from a diverse group can provide a fuller picture of potential public reactions.
  • Quick Response: Responding promptly and appropriately to public sentiment is essential to mitigate potential damage.
  • Learning & Growth: Even when faced with backlash, companies can learn from these experiences to inform future decision-making, ensuring both inclusivity and understanding of their diverse consumer base.

The Bud Light-Dylan Mulvaney partnership highlights the challenges companies face in today's dynamic public sentiment. Emphasizing the need for strategic foresight, it's crucial for brands to balance inclusivity with timely responses and a deep understanding of their consumer base's views.

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Strategic Intelligence: Concepts and Principles

Strategic intelligence is fundamentally about taking the abundance of tactical data, eliminating the noise, and focusing on the most salient information to expand that knowledge within a new or existing long-term framework for action. This cycle also results in a near-term and over-the-horizon comprehension of economic, political, security, and social dynamics. This process gives the analyst a consistent and reliable way of mastering their substantive responsibilities.

New tools and technologies are being developed at an unprecedented pace, each with the potential to revolutionize how we collect, analyze, and communicate data. From advanced data mining algorithms to AI-powered predictive models, these technologies enable us to process vast amounts of data more quickly and accurately than ever before.

Let's delve deeper into the core concepts and principles of Strategic Intelligence–including data collection/horizon scanning, analysis, and dissemination–and the pivotal role of technology in enhancing its effectiveness.

Components of the Strategic Intelligence Process

1) Environmental Scanning: Monitoring a wide array of sources for early signs of change.

The first step in Strategic Intelligence is the continuous observation of the external environment. By constantly scanning diverse sources of information, from news articles and financial reports to social media feeds and academic research, you can detect early signs of change in the market, regulatory landscape, technological innovations, or socio-cultural shifts.

This is achieved through:

• A Diversity of Sources: To gain a holistic understanding, it's vital to gather information from a broad spectrum of sources, ensuring a comprehensive view of the environment.
• Improved Signal to Noise Ratio: Strategic threats can be very nuanced and unless addressed with the right technology may result in too much noise to be useful. Deploying NLP technology in parallel to traditional Boolean searches can alleviate this problem and make wide tracking possible.

2) In-depth Analysis: Employing analytical tools to dissect data, looking for connections and patterns.

Once a wealth of information has been gathered, the next step is to make sense of it. This involves using analytical tools and techniques to break down the data, searching for connections, patterns, and potential implications for the organization.

This is achieved through:

• Analytical Frameworks: Tools such as SWOT (Strengths, Weaknesses, Opportunities, Threats) or PESTEL (Political, Economic, Social, Technological, Environmental, Legal) can be employed to structure the analysis. Artificial intelligence is playing more of a role in this process now as well, with the ability to coalesce less structured data.
• Critical Thinking: Beyond structured tools, the process requires a discerning eye, questioning assumptions and probing deeper into the data to unearth insights.
• Analytical software: Using special-purpose data visualizations and codified threat frameworks can help analysts spot the most useful and impactful content. Spending hours reading through a feed is not possible for the wide surface area required.

3) Scenario Planning: Predicting possible future developments and planning accordingly.

Having understood the present landscape, Strategic Intelligence then looks to the future. Scenario planning involves crafting various potential futures, based on current trends and possible events. This doesn't aim to predict the future precisely but rather to visualize a range of plausible scenarios, preparing the organization for various eventualities.

This is achieved through:

• Diverse Scenarios: It's important to consider both optimistic and pessimistic futures, as well as those that might seem unlikely but could have a significant impact.
• Flexibility: As new information becomes available, scenarios may need to be adjusted or new ones created. Maintaining flexibility ensures continued relevance.
• Scenario monitoring: Expressing scenarios as trackable units in monitoring tools allows analysts to use their trends and other context when assessing changes in likelihood and making better predictions.

4) Strategy Formulation: Incorporating insights into actionable strategies for resilience and growth.

With a comprehensive understanding of the present and potential future landscapes, the organization can now create strategies to navigate them. This involves integrating insights into actionable plans, tailored to help the organization grow, innovate, and remain resilient against potential threats.

This is achieved through:

• Alignment with Goals: Strategies should align with the organization's broader objectives and vision.
• Stakeholder Involvement: Engaging a wide range of internal stakeholders in the strategy formulation process ensures buy-in, diverse perspectives, and smoother implementation.

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Strategic Intelligence for Business Resilience

Strategic Intelligence stands at the forefront of fortifying business resilience by empowering organizations to envisage future possibilities and proactively recalibrate plans. With a panoramic view of potential risks and opportunities across diverse domains, analysts can help executives bolster their decision-making.

Supply Chain Management

Strategic Intelligence can identify potential disruptions within the supply chain, including those associated with third, fourth, and even fifth-party risks. This "guilt by association" can arise from indirect relationships with vendor suppliers or even further down the chain.

The COVID-19 pandemic highlighted the vulnerability of global supply chains. Companies grappled with issues such as scarcity of raw materials, labor shortages, and transport bottlenecks, often originating from suppliers several tiers down the chain. If an organization's primary supplier is in a politically turbulent region or its providers are facing similar issues, the organization could be indirectly impacted. Strategic Intelligence can help identify these extended supply chain risks, facilitate the search for alternative suppliers, and aid in devising contingency plans to mitigate potential disruptions.

People and Locations

Strategic Intelligence is instrumental in managing risks associated with people and locations, from succession planning to upskilling and even relocation of manufacturing due to geopolitical concerns.

• Succession Planning

  When faced with executive risks like sudden departures or illnesses of key leaders, having a smooth transition becomes possible by identifying potential successors and evaluating their readiness and alignment with the company's strategic direction. 

• Upskilling

  Strategic Intelligence identifies potential skills gaps and new technology impacts, enabling strategic planning for upskilling or reskilling initiatives to maintain a competitive, goal-oriented workforce.

• Relocation of Manufacturing

  Amid geopolitical risks such as political instability or unfavorable policies, operational continuity can be maintained by detecting such disruptions early and guiding the search for alternative manufacturing locations preemptively.

• Physical Risks to People or Locations

  By detecting disruptions such as political instability or unfavorable policies early and proactively searching for alternative manufacturing locations, you can maintain operational continuity amid geopolitical risks.
  
  

Digital and Technological Areas

Strategic Intelligence can build business resilience across digital and technological domains by:

• Proactively scanning the digital landscape to identify problematic cyber threats and recommending timely countermeasures
• Offering insights into the reputation, operation, and cyber risks associated with third-party suppliers, vendors, and partners
• Assisting businesses in strengthening their cybersecurity infrastructure to protect valuable digital assets
• Future-proofing business models against the pace of technological change
• Guiding the evaluation and implementation of data privacy measures in line with changing regulations

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Global Risk Landscape

In the increasingly interconnected world, businesses are part of a complex network of relationships, some of which they may not even be aware of. The risks are constantly changing in nature and complexity. Elements like economic conditions, societal shifts, environmental impacts, tech advances, geopolitical changes, and legal requirements intertwine, creating a multifaceted global risk landscape.

In this context, employing Strategic Intelligence is crucial to navigate these uncertainties, anticipate changes, and protect their interests.

Economic Risks

Factors like trade policies, market fluctuations, and financial crises influence the global economy. Strategic Intelligence provides organizations with a macroeconomic perspective, enabling them to anticipate economic downturns or currency fluctuations and to develop risk mitigation strategies.

A recent example of such a risk was the fall of Silicon Valley Bank, a major player in the tech industry. The bank's collapse sent shockwaves through the tech sector, disrupting startups and venture capitalists who had relied on the bank for financial support. This incident underscores the value of Strategic Intelligence in anticipating these kinds of economic risks and preparing contingencies.

Geopolitical Risks

Geopolitical dynamics, including shifts in the political climate, international relations, and regulatory changes, can impact businesses operating globally. Strategic Intelligence offers insights into these dynamics, helping organizations understand and anticipate the potential implications of political decisions, conflicts, or power shifts. 

Consider the ongoing trade tensions between major economies like the United States and China. These tensions can lead to regulatory changes that impact global supply chains, affecting businesses that rely on these markets. Apple, for example, is highly reliant on Chinese manufacturing. Imposing tariffs on Chinese goods in 2018 and 2019 dramatically increased Apple’s production costs, which forced Apple to choose between absorbing these costs and reducing its profit margins or passing them on to customers.

These tensions were foreseeable due to longstanding issues like intellectual property disputes. In hindsight, Apple could have diversified its supply chain to other regions, reducing its dependence on any single market. This proactive approach, along with stronger policy engagements, would've given Apple better flexibility in navigating geopolitical challenges. Such insights are invaluable for corporate risk analysts, allowing them to provide more informed and strategic advice to the c-suite.

Technological Risks

Technological advancements like AI, blockchain, and IoT transform everything they touch, bringing opportunities and risks. While new technology can enhance efficiency and create new market opportunities, it can expose businesses to cyber threats and competition from tech-savvy disruptors.

Artificial intelligence alone is poised to completely change the business landscape over the next decade. The launch of ChatGPT by OpenAI has already created new niches within the market and removed traffic from tech behemoth Google. Did Google’s Strategic Intelligence reveal an NLP model as a potential risk?

Environmental and Climate Risks

With climate change becoming an urgent global issue, organizations must consider how they will be affected. Natural disasters, regulatory changes, and transitioning to a low-carbon economy could change the game. Environmental regulations can raise production costs and eat into profits.

BP (British Petroleum), a company historically known for its oil and gas operations, has been adapting its business model in response to the transition to a low-carbon economy. Decreased demand for oil and gas, increased competition from renewable energy providers, and stranded assets are all real challenges for BP.

Recognizing these challenges, BP announced a new strategy in 2020 to become a more diversified, lower-carbon energy company. They committed to cut their greenhouse gas emissions to net zero by 2050 or sooner and increase their investments in alternative energy sources, including wind and solar power. This move signifies the company is utilizing Strategic Intelligence to stay ahead of changing markets.

Social and Cultural Shifts

Failing to understand social and cultural trends can lead to catastrophic consequences. Missteps, such as overlooking antisemitism or underestimating the power of viral videos can lead to extremist actions like the New Zealand mosque shootings or content that is potentially life-threatening to underage users.

Strategic Intelligence empowers risk analysts to keep a vigilant eye on these shifts, ensuring they are well-informed on everything from changes in consumer behavior to powerful social movements.

The types of risks that can be identified and assessed include:

• Arab Spring (2010-2012): 
  The Arab Spring protests and uprisings were partly triggered by public sentiments shared on social media platforms. Risk analysts, especially those working for multinational corporations with operations in the affected regions, picked up these signals to advise their organizations on potential disruptions, ensuring safety measures for employees and assets.
• Rana Plaza Building Collapse (2013): 
  After the tragic building collapse in Bangladesh, there was a massive public outcry over the working conditions in garment factories. Risk analysts in the apparel industry, using media reports and worker testimonials, advised brands to audit and ensure the safety of their supply chains, leading to improved conditions and potentially saving lives.
• COVID-19 Pandemic (2019-2020): 
  In the early stages of the COVID-19 outbreak, some risk analysts and health experts warned of the potential global spread and severity of the virus, urging businesses and governments to take preemptive measures. Those who heeded the warnings were better prepared for the challenges that ensued.
• Cambridge Analytica and Facebook (2018): 
  Public discourse, investigative journalism, and whistleblower accounts revealed the unauthorized use of Facebook user data by Cambridge Analytica. Risk analysts, especially in tech companies with vast user data, would have used these revelations as a warning sign, urging organizations to ensure their data handling practices were secure and ethically sound.
  
  

Social Media

Social media has become a potential source of reputational risk and a platform for harmful and damaging content. Businesses must anticipate and prepare for public perception of their actions, spanning from marketing to social media behavior. If they fail to do so, they may face significant backlash.

Some examples include:

• United Airlines Incident (2017): When a video of a passenger being forcibly removed from a United Airlines flight went viral on social media, it led to widespread outrage and condemnation. The airline's initial response was deemed unsatisfactory, which only exacerbated the negative press. The fallout had immediate economic repercussions, with the company's stock dropping significantly in the days following the incident, wiping off billions in market value.
• Samsung Galaxy Note 7 Explosions (2016): Multiple users reported on social media that their Galaxy Note 7 smartphones were catching fire or exploding. Videos and pictures of the charred phones spread virally. Swift action was required, and Samsung had to recall the product, resulting in billions in losses.
• Tesla's Autopilot Concerns: Several videos surfaced on social media showing Tesla drivers misusing the autopilot feature, some even sleeping behind the wheel. Such videos pose both a physical risk (potential accidents) and severe reputational and financial risks for the company.
• Chipotle E. Coli Outbreak (2015-2016): After reports of an E. Coli outbreak linked to Chipotle surfaced on social media, the company experienced a significant drop in sales and stock value. Early monitoring could have potentially allowed for faster intervention, minimizing both health risks and financial fallout.
  
  

Monitoring Social Media

The immediacy with which accurate and inaccurate information spreads on social media makes it imperative for corporate risk analysts to monitor these platforms consistently. However, the complexity and vastness of data in video-heavy platforms like YouTube and TikTok make it extremely difficult for them to analyze manually, especially without robust analytics tools, creating blind spots in detecting emerging risks on social media.

Sophisticated software capable of capturing heavy video and audio content, coupled with narrative-based analysis that can flag risky and harmful content, is a tool modern corporate analysts need to be most effective.

Legal and Compliance Risks

Legal and compliance risks are a significant concern for businesses operating in complex regulatory environments. These risks can arise from changes in laws, regulations, or standards that affect a company's operations, products, or market.

In 2012, the Federal Trade Commission (FTC) charged Google for violating privacy laws. They found Google guilty of misleading Apple's Safari users by assuring them that they weren't using tracking cookies when, in fact, they were. This compliance blind spot cost Google $22.5 million in civil penalties.

Strategic Intelligence can help organizations prevent these situations by staying abreast of any policy changes, understanding the potentially wide-reading implications, and developing strategies to ensure compliance across the board.

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Strategic Intelligence and Crisis Management

The risk executive, while unable to avert the inevitable crisis, is capable of diluting its effects through the use of the strategic intelligence cycle. The muscle memory of this process gives the practitioner a foundation for assessing risk, minimizing damage, and exploiting unforeseen opportunities in the midst of catastrophe. This is achieved through: 

• Threat Horizon Scanning

  Strategic Intelligence helps businesses transform from reactive to proactive entities. By meticulously tracking trends and deciphering patterns, Strategic Intelligence uncovers potential vulnerabilities and provides early warnings of shifting trends. This foresight allows businesses to craft contingency plans, ensuring crises do not blindside them. 

• Scenario Planning

  Strategic Intelligence aids in both short-term and long-term scenario planning. It helps businesses prepare for everyday situations and high-impact risks that may not yet be on their radar. Risks like what companies faced during COVID-19 when employees went remote. Spear phishing, a cyber threat where an attacker pretends to be from an employee's IT department requesting sensitive information or user credentials, skyrocketed. That eventuality could have been prepared for and combated better with scenario planning.

• Recovery and Adaptation

  Once an immediate crisis subsides, Strategic Intelligence meticulously analyzes the post-crisis environment and steps in as a guide for recovery and future adaptation. It provides a comprehensive analysis of the crisis management process, highlighting strengths, weaknesses and suggesting areas for improvement.

• Communication and Stakeholder Management

  Throughout all stages of a crisis, Strategic Intelligence equips organizations with the data and insights for clear and effective communication. All stakeholders, from employees to customers to investors, are kept informed and engaged in challenging times.

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The Future of Strategic Intelligence

The field of Strategic Intelligence is moving full steam ahead with technology and innovation at the helm of its transformation and increasing importance. Here's a look at what the future might hold for Strategic Intelligence:

• AI-Driven Predictive Analytics

  As AI and machine learning (ML) advance, they'll refine their capacity to sift through large data volumes and spot patterns, improving predictions about market trends, customer behavior, and global risks. 

• Real-time Risk Monitoring

  With IoT devices and 5G technology, businesses will monitor risks in real-time, providing immediate insights into market changes, threats, and opportunities for quick, agile decision-making.

• Integration of Different Intelligence Disciplines

  Strategic Intelligence will merge with other intelligence domains like Competitive, Market, and Cyber Intelligence. This integrated approach will offer businesses a comprehensive view of their ecosystem.

• Personalized Intelligence

  Enhanced data collection will allow businesses to develop tailored intelligence profiles for specific departments or decision-makers, ensuring relevant, actionable insights.

• Human and AI Collaboration

  AI will be pivotal in Strategic Intelligence's future, but the human touch is essential. While AI handles data processing and pattern recognition, humans provide context, ethical judgments, and articulate insights, making the human-AI partnership critical for Strategic Intelligence's full potential.

These trends and changes within the industry are exciting, but it’s important not to miss the complete picture. Strategic Intelligence comes with its unique set of hurdles. Data privacy concerns loom as our reliance on data collection and analysis grows exponentially. Also the question of algorithmic biases, which may inadvertently privilege or exclude certain demographics, demands our attention.

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Taking the Next Steps

A dedicated Strategic Intelligence team with proactive tools is no longer a luxury but a necessity. If an organization still needs to recognize the value of such a team, the time is now. Consider Strategic Intelligence not as an expense but as an investment. It's about safeguarding the organization from unforeseen challenges and leveraging the opportunities they might present.

Addressing Intelligence Blind Spots

Even if a Strategic Intelligence team is already in place and doing everything right, there may still be gaps. A solution like Pendulum addresses the intelligence blind spot posed by video and audio mediums that now predominate content creation. We help organizations anticipate community engagement, navigate narratives, and capitalize on intelligence. The Pendulum methodology brings about impactful change for leaders and organizations intent on strengthening their future. We help ensure businesses are not only prepared despite threats, but ahead of the curve.

Reach out to Pendulum today and take the first step towards a more risk-resilient tomorrow. 

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