Analysis: De-risky business – EU risk assessments for economic security
The EU is stepping up efforts to protect its economic security. This analysis examines the EU’s approach to identifying risks and vulnerabilities — and how it could be improved.
Why is de-risking so important for the EU’s economic security?
Economic interdependence brings major benefits, but it can also create vulnerabilities. This is particularly true when critical supply chains are concentrated, alternatives are limited or dependencies can be exploited for geopolitical pressure. De-risking aims to reduce these vulnerabilities while maintaining open trade.
What has the EU already done to identify economic security risks, and what have these efforts achieved?
The EU has developed methods to map strategic dependencies and supply-chain vulnerabilities. It has also launched risk assessments for critical technologies and economic coercion, and introduced monitoring and early-warning tools. The EU is also increasingly integrating risk assessment into policies governing the single market.
These efforts have improved the EU’s understanding of structural dependencies and vulnerabilities in supply chains and critical technologies. They also provide an evidence base for policies aimed at strengthening resilience and reducing risk.
What can the EU learn from partners when it comes to assessing economic security risks?
The EU can learn from partners with more experience of economic security policy, particularly Japan, which has worked on these issues for longer. Cooperation could focus on developing risk-assessment methodologies and conducting joint scenario exercises and stress tests. This could help the EU strengthen its ability to identify emerging risks and move from mapping existing dependencies towards more forward-looking risk assessments.
International cooperation could also help make risk assessments more consistent across countries. The OECD could provide a forum for developing more sophisticated and harmonised methodologies and a shared understanding of economic security risks among partner countries.
How can the private sector strengthen the quality of the EU’s economic security risk assessments?
Companies often have information that governments lack, particularly on complex supply chains, technologies, sourcing decisions and new market developments. Structured cooperation with industry can therefore make risk assessments more accurate. For this to work, commercially sensitive information must be protected and a broad range of companies should be represented.
Why does the EU need to move from periodic risk assessments towards continuous risk intelligence?
The EU has made notable progress in mapping strategic dependencies, supply-chain vulnerabilities and certain technology-related risks. But these assessments are better at identifying existing structural vulnerabilities than anticipating new risks from technological change, geopolitical developments or foreign actors.
Continuous monitoring, foresight, stress-testing and early-warning systems could help the EU identify and respond to risks before they materialise.