Why Boards Should Care More About Geopolitics Than Ever Before

Geopolitical risk seems higher than at any point in recent memory. Managing this risk effectively should be a core competency for all businesses — and the board should lead the way.

After decades of globalisation shaping the world order, businesses are now forced to accept a new reality. Geopolitical risk is an ever-growing threat with far-reaching potential consequences. This risk arises from a growing polarity in the interactions between and among countries. Shifting and expanding alliances, intensifying economic competition among nations, national security concerns, and political division and instability all contribute to geopolitical risk. The future gets even cloudier given concerns over the duration and possible expansion of regional conflicts, the existence of potentially volatile territorial disputes, and multinational attempts at climate initiatives.

As 2024 begins, geopolitical analysts are focused not only on the ongoing conflicts in Eastern Europe and the Middle East, but also on myriad other issues as diverse as China’s faltering economy, actions of emboldened terrorist groups, the opportunities and threats from the growth of artificial intelligence (AI), and what The Economist has called the “biggest election year in history” in which more than half the world’s population — more than four billion people — will vote in national elections. While many of these elections will have impacts that extend beyond the voting country’s borders, none is likely to affect the geopolitical landscape more than the U.S. election.