The modern board is at the mercy of geopolitical risk
The modern board is at the mercy of geopolitical risk. We’ve seen the signs over and over again. Is your board talking about it and, more importantly, does it know how to tackle the problem?
We’ve seen the threats for most of this decade, ever since the world was plunged into chaos over COVID. It hasn’t exactly gotten strategically easier for businesses since. But this last year or two has really emphasised how quickly things can change over the course of weeks, even days.
The real problem for boards is that stakeholders might not show too much patience for adapting to geopolitical crises. Investors will still be focused on results, communities and employees will still be focused on support, while regulators will still be focused on compliance. In the middle of it all is a group of directors, increasingly caught off guard, but well aware that being so won’t buy much time, if at all.
Let’s dive in further:
What’s the background to this?
In general, geopolitics appeared far less on boardroom agendas 10 years ago than it does today. But take the last six months as a prime example of how far removed we are from that time: The Iran War began in February 2026 with US and Israeli attacks on Iranian territory. Since then, both sides have traded airstrikes back and forth. Crucially, the war has meant the effective closure of the Strait of Hormuz, affecting roughly 20% of global oil movements, pushing fuel prices up and creating knock-on effects for businesses worldwide.
The essential takeaway from the war so far is how much the tone changes in a short space of time. The opening two months were dominated by hostility, before we began to hear talks of a ceasefire and eventual peace agreements. When we seemed on the cusp of seeing those agreements put into action, talks broke down, strikes resumed, and the chance of lasting stability looks further away than ever.
This is what boards have to navigate: the chaotic, flip-flop that modern geopolitics creates. If it’s not a war and fuel crisis, it’s trade standoffs, sanctions and protests. Not to mention the fact that governments continue to push ahead with more stringent rulebooks with bigger compliance requirements.
All of it comes together to put boards firmly at the mercy of geopolitical risk. From the outside, it seems as though their success or failure is dictated by whether that flip-flopping happens at the right or wrong time. Meanwhile, long-term strategy, which has dominated boardroom discussions for decades, now lies forgotten.
So, geopolitical risk is important?
It’s essential; it’s not going away, and depending on your company, it could be one of the most crucial strategic elements of all.
The major worry with geopolitical risk is that, right now, many companies simply don’t have the expertise to deal with it. We’re six years into a chaotic decade for business, but for one reason or another, boards still find themselves underprepared. And it shows, too; a recent TCGI survey around boardroom resilience found that, five years ago, firms did not consider political uncertainty among their top 10 risks to be concerned about. Now, almost a quarter do: a dramatic change in such a short space of time.
It’s an extra layer of a big task. You can’t just come up with plans to tackle geopolitical risk; you have to show you have the right people to put those plans into action. Unfortunately, this is easier said than done. The talent pool is small, and the demand is high. Many boards might simply miss out on the required skillsets because they can’t compete with larger players in the industry. This, in itself, adds to the risk. Many directors won’t be able to catch a break.
What kind of expertise do boards need and can they find it?
Experts in geopolitical risk will have all of the following skills:
- They have a deep understanding of corporate strategy and risk.
- They are incredibly knowledgeable in global affairs, new or potential conflicts with worldwide impacts, and the intricacies of trade, sanctions, and the knock-on effects of government changes on international relations.
- They know how to navigate through substantial geopolitical fallouts – like Iran, Israel-Gaza or Ukraine.
Finding the right candidate to fill a board seat depends on multiple things, like the availability of talent, training, networks, and an alignment of values. In cases like the current crisis, this is a heavy ask.
It’s also worth noting that the market for geopolitical expertise is highly active right now as companies realise en masse that they need to be prepared.
The loaded and rapidly changing news cycle at the moment suggests that former diplomats or similar professionals will be in heavy demand for NED positions because they have a huge amount to offer, even in an advisory capacity. However, if your board is struggling to find suitable candidates, it always helps to broaden your horizons and explore your networks in detail. Perhaps contacts who you’ve known for years served as a director/C-suite leader during turbulent political times in other parts of the world.
Should I be worried?
Not so much worried, but you should realise that the quest for geopolitical experience on your board may be a long game with a two-pronged approach.
The first prong is finding the best expertise you can realistically acquire because, unfortunately, geopolitical risk is now a defining feature of our generation. It won’t go away in a hurry.
The second prong is preparation, as far as possible, for short-term shocks. For example, if oil prices stabilise and ease pressure on your company, your board needs a plan for when they de-stabilise again, or something else of similar magnitude occurs.
Practically, this will involve assessing how easy it is for your company to pivot. Can it change suppliers, supply routes, consumer bases, prices, compliance capacity, etc., easily or not? If it can’t, why not? Does that run the risk of backing your company into a corner? If it can, how will that pivot look in practice? And, in any event, how will you keep stakeholders informed as events unfold around you at a rapid pace?
These are practical questions that should get you thinking the right way. In reality, the world always moves faster than corporate governance is comfortable with, so it’s better to get ahead. Sensibly, especially when it comes to a topic like this.