DERISK: How firms navigate de-risking regimes

The global economic paradigm in the West is undergoing a significant shift from a focus on integration and prosperity to one centered on economic security and risk management. This change is driven by concerns that economic interdependence can lead to vulnerabilities and coercive power dynamics. As a result, Western governments are implementing policies such as export controls and investment screenings, exemplified by the US Inflation Reduction Act and the EU's European Economic Security Strategy.While these policies aim to "de-risk" economies, the responsibility largely falls on private firms, which must navigate conflicting pressures from government regulations and shareholder expectations. There is a notable lack of systematic understanding regarding how companies respond to government signals about de-risking, including what influences their strategies and behaviors. DERISK will offer a systematic analysis of how firms and in the US and Europe navigate evolving de-risking regimes, focused on how firms assess risk, how they manage and seek to shape government policy as well as how state-market relations shape firm behaviour.

The global economic landscape is undergoing a paradigm shift, with Western ideas transitioning from a belief in the virtues of economic integration to concerns over economic interdependence as a tool for power and coercion. This shift marks a move away from the neoliberal global order towards a new era of "unpeace," where economic dependencies are seen as vulnerabilities. Western governments are responding by implementing measures like export controls, investment screenings, and national industrial policies, as evident in the US Inflation Reduction Act and the EU's European Economic Security Strategy. This change has led to the rise of the "Economic Security State," characterized by a political impetus to de-risk imposed by states, but where the actual burden of de-risking primarily falls on private firms, impacting their supply chains and market strategies. DERISK studies how firms respond to these governmental directives and their influence on state-market relations. The project will analyze variations in de-risking regimes and corporate responses, examining the interplay between government policies and corporate strategies. It will do so both through a broad mapping (WP1), as well as in-depth case studies in communications, energy, and insurance (WP 2 & 3). WP 1 of DERISK involves systematic mapping of de-risking regimes in the US and Europe, focusing on variations in government and corporate articulations of de-risking. WP 2 analyzes corporate responses to these regimes, using interest alignment as a key determinant of their strategies, ranging from compliance to resistance. WP 3 explores how firms shape these regimes, and how different forms of state-market relations result in different mechanisms for influence. The project uses mixed-methods, including content analysis and interviews, to understand the dynamics of de-risking in state-market relations.