Does
your
company
do
worst-case
scenario
planning?
What
will
you
do
if
the
rule
of
law
erodes
and
corruption
accelerates?
The
year
2024
is
set
to
be
one
of
the
biggest
and
most
important
election
years
in
history.
It
comes
at
a
time
of
global
instability,
where
there
is,
once
again,
a
war
in
Europe,
and
the
post-World
War
II
international
order
itself
is
under
strain.
Although
decentralized
technology
cannot
provide
meaningful
protection
against
a
total
collapse
of
the
rule
of
law,
such
a
scenario
remains
unlikely.
Nevertheless,
erosion
of
the
rule
of
law
is
still
possible.
There
are
several
areas
where
extreme
political
actions
could
undermine
businesses
and
investors
that
depend
on
predictable
and
stable
environments,
leading
to
significant
problems
for
companies.
I
identify
three
risks
in
particular
that
can
at
least
be
offset
by
careful
application
of
decentralized
technology:
-
The
one
that
most
blockchain
boosters
think
about
right
away
is
currency
manipulation.
From
printing
money
to
finance
deficits
to
pre-election
spending
splurges,
central
banks
and
treasuries
face
a
lot
of
political
risk.
Shifting
away
from
volatile
local
currencies
to
stablecoins
is
the
most
practical
alternative
for
businesses.
Keeping
as
little
of
volatile
local
currency
as
possible
is
advisable,
where
it
is
legally
permitted. -
Another
big
risk
is
political
interference
in
the
judiciary.
Courts
are
where
people
go
to
resolve
disputes,
and
if
the
umpires
are
corrupt,
the
risk
of
a
bad
or
unfair
outcome
is
high.
The
best
option
is
to
stay
out
of
politically
compromised
courts
as
much
as
possible.
Moving
from
paper
contracts
to
transparent,
blockchain-based
smart
contracts
that
are
enforced
automatically
offers
an
opportunity
to
reduce
the
risk
of
nonpayment
or
disputes.
Furthermore,
it
increases
the
likelihood
of
automated
and
fact-based
dispute
resolutions. -
Corruption
at
all
levels
is
another
big
risk,
internally
and
externally.
Corrupt
officials
often
pursue
arbitrary
regulatory
actions
or
selective
and
extreme
enforcement
against
firms
that
won’t
play
ball.
Their
best
ally
in
this
process
is
opacity.
Corruption
is
never
popular,
and
bad
actors
rely
on
others’
silence
to
get
away
with
their
behavior.
The
best
protection
against
this
kind
of
rent-seeking
is
extreme
and
total
transparency.
If
all
your
orders,
shipments,
purchases
and
prices
are
public,
then
theft
is
immediately
visible
to
all.
This
last
practice,
extreme
transparency,
is
something
businesses
in
mature
economies
would
hesitate
to
embrace,
but
it’s
a
real
and
proven
strategic
option.
In
the
Indian
state
of
Maharashtra,
cooperative
farmers
at
the
Sahyadri
Farmers
Producer
Company,
frustrated
with
the
immensely
variable
prices
and
wildly
different
markups
by
middlemen,
put
all
their
shipments
and
prices
on
the
Polygon
blockchain
with
the
help
of
a
local
startup,
Emertech.
The
result:
lower
overheads
and
fairer
prices
for
all
involved.
Most
companies,
especially
big
ones,
have
little
choice
other
than
to
play
by
the
rules,
however
arbitrary
they
might
be.
This
is
one
of
the
reasons
cryptocurrency
adoption
in
many
countries
by
consumers
has
far
outpaced
that
by
enterprises.
Governments
generally
do
not
have
the
power
to
prosecute
every
consumer
for
every
infraction.
Exchanging
your
local
currency
for
crypto
or
stablecoins
may
not
be
legal,
but
individuals
can
often
fly
beneath
the
radar.
Businesses,
however,
have
real-world
assets,
such
as
real
estate
and
factories
of
immense
value,
that
can
be
seized
as
penalties.
Blockchains
and
cryptocurrency
can
only
mitigate
some
of
the
big
political
risks
faced
by
enterprises
in
the
coming
years.
But,
to
make
money,
you
must
take
risks,
and
that
means
having
assets,
people
and
resources
in
the
market,
and
accepting
the
ups
and
downs
that
come
with
it.
No
risk,
no
reward.
Note:
The
views
expressed
in
this
column
are
those
of
the
author
and
do
not
necessarily
reflect
those
of
CoinDesk,
Inc.
or
its
owners
and
affiliates.
