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Geopolitical Concerns in the Corporate Sector

In a rapidly shifting global landscape, corporate leaders are facing unprecedented challenges stemming from geopolitical tensions. A recent study by the Boston Consulting Group (BCG), in collaboration with IMD Business School and the World Economic Forum, underscores the critical need for businesses to not only recognize but actively manage these geopolitical risks and opportunities. Despite a growing awareness among executives, the findings reveal that fewer than 20% of firms have established specialized departments dedicated to geopolitical matters.

The Context of Growing Challenges

As of 2025, global policy uncertainty has surged to its highest levels in two decades, surpassing the peaks observed during the global financial crisis and significantly above the turmoil caused by COVID-19. This sharp rise in uncertainty is attributed to a convergence of factors including trade reconfigurations, weakening multilateral institutions, and the increasingly strategic use of economic sanctions. Business leaders are now contending with persistent threats that not only impact their operational stability but also their long-term competitive edge. According to senior executives, these threats extend beyond mere economics, with geopolitical conditions such as the ongoing US-China rivalry and the Russia-Ukraine conflict shaping business operations around the globe.

Executive Awareness Versus Action

While corporate leaders express heightened awareness of geopolitical issues, the study finds that many organizations continue to adopt a reactive stance towards these developments. There exists a significant gap between recognizing geopolitical risks and implementing effective strategies to address them. The white paper, titled "Building Geopolitical Muscle: How Companies Turn Insights into Strategic Advantage," highlights that although geopolitical topics have gained importance in corporate agendas since the onset of the COVID-19 pandemic and the geopolitical shift caused by events like the invasion of Ukraine, systematic approaches to integrate these considerations into core business practices are lacking.

Nikolaus Lang, a key figure at the BCG Henderson Institute, posits that treating geopolitics merely as a headline issue is insufficient. Instead, it is crucial for firms to cultivate what he refers to as "geopolitical muscle"—the ingrained capacity to perceive, adapt, and act on geopolitical insights at scale.

Key Findings from the Study

The paper offers several critical insights into the current state of corporate geopolitical awareness:

1. Ubiquity of Geopolitical Effects: The impact of geopolitical shifts is felt globally, affecting various dimensions of business, from policy volatility in the US to competitive pressures in Europe.
2. Need for Dedicated Geopolitical Expertise: As leadership bandwidth becomes stretched, companies are recognizing the necessity for dedicated teams equipped to handle geopolitical initiatives. Such teams are more effective when they maintain direct access to top leadership.
3. Diverse Operational Models: The report notes a variety of approaches to integrating geopolitical capabilities within companies, ranging from task forces and senior advisers to fully devoted teams.
4. Limitations in AI Tools: Despite advancements, many businesses still rely heavily on manual analysis or external consultants for filtering geopolitical noise, indicating a gap in the application of emerging technologies like AI in situational awareness.
5. Connecting Geopolitics to Business Outcomes: The study stresses the importance of articulating geopolitical developments in terms that resonate with business impact. Bridging this gap is essential for generating actionable insights that drive corporate strategies.

Strategies for Moving Forward

In response to these findings, the report outlines five foundational strategies for business leaders seeking to cultivate geopolitical capabilities:

• - Clear Leadership Mandates: Establish top-down mandates that prioritize geopolitical considerations in decision-making processes.
• - Robust Trend Detection: Develop systems to identify and monitor geopolitical signals effectively.
• - Flexible Operating Models: Create adaptable frameworks that can respond quickly to changing geopolitical contexts.
• - Talent Development: Foster credible leadership that possesses the requisite knowledge and expertise in geopolitics.
• - Integration into Processes: Ensure that geopolitical considerations are systematically integrated into decision-making frameworks.

By adopting these strategies, organizations can not only mitigate risks associated with geopolitical disruptions but also leverage them to enhance their brand reputation, access new business avenues, and strengthen their market positions.

The findings from this research act as a wake-up call for businesses. Simon J. Evenett, Professor of Geopolitics and Strategy at IMD Business School, emphasizes that understanding geopolitics is no longer a luxury; it is a fundamental aspect of modern corporate leadership. Underestimating its importance could lead companies to miss out on pivotal growth opportunities in an increasingly complex world.

Thus, the imperative is clear: for companies to thrive in an era marked by geopolitical unpredictability, they must evolve from passive observers to proactive participants in managing their geopolitical landscapes.

For the full publication, you can access it here.