Facebook Facebook icon Twitter Twitter icon LinkedIn LinkedIn icon Email


Navigating geopolitical turmoil: 8 strategies for business leaders 

Published 16 May 2024 in Strategy • 7 min read

From reconfiguring supply chains to engaging with policymakers, these tactics, based on expert interviews, offer a roadmap for multinationals to thrive in a world marked by geopolitical turbulence.

From the boardrooms of Wall Street to the executive suites of global corporations, geopolitical disruptions – from Russia’s ongoing war in Ukraine to the Israel-Hamas conflict – have become a pressing concern for business leaders worldwide. Jamie Dimon, Chief Executive Officer at JPMorgan Chase, recently cautioned investors about the precarious state of global affairs, describing the current period as potentially “the most dangerous time the world has seen in decades.” 

His sentiments echo those of other industry titans like Citigroup boss Jane Fraser and Zhao Haijun, Co-CEO of China’s largest chipmaker, SMIC, who have both sounded alarms about the impact of geopolitical tensions. Fraser warned on a recent earnings call: “We have to keep a close eye on geopolitics as the US-China relationship becomes increasingly strained and is fragmenting economic blocs.”

These warnings are not mere isolated remarks. They reflect a growing trend evident in corporate filings with the US Securities and Exchange Commission (SEC). In 2023, a staggering 75% of globally active firms highlighted the importance of geopolitical considerations. This trend is further underscored by data showing a rise in the mention of geopolitical factors in corporate filings, surpassing discussions on ESG, sustainability, or climate change by 2022.

However, despite the increasing recognition of geopolitical risks, many businesses are still grappling with how to effectively navigate these challenges. Factors such as lack of expertise, resource constraints, and the complexity of global dynamics contribute to this struggle. 

To address these challenges, a recent study I conducted for the World Economic Forum (WEF) identified eight key steps businesses can take to navigate geopolitical disruptions more effectively, based on interviews with 13 senior executives from international businesses. 

In 2023, 75% of globally active firms highlighted the importance of geopolitical considerations in their corporate filings with the US Securities and Exchange Commission (SEC)

Recognize the significance of geopolitical rivalry

The first step for businesses is to acknowledge the keen impact of intensifying geopolitical rivalries on various aspects of their operations and performance. From revenue and costs to risk management and innovation, geopolitical dynamics can shape the business landscape in profound ways. While some companies are awakening to these realities, many are still in the early stages of understanding and responding to geopolitical challenges. Adjusting to geopolitical rivalry – through reordering global supply chains, say – can strain resources and impair cash flow, making it imperative for businesses to prioritize this issue at all levels, from operational personnel to CEOs and boards.

Enhance understanding of geopolitical dynamics

To effectively navigate geopolitical risks, businesses need to deepen their understanding of global dynamics across all levels of the organization. Developing a robust geopolitical radar and network of experts, both internally and externally, can help companies stay informed and agile in the face of geopolitical uncertainties. This involves moving beyond sporadic engagement with geopolitical issues to integrating them into routine business operations.

Avoid siloed responses

Geopolitical challenges often cut across multiple functional areas within an organization. Therefore, businesses are not advised to task a single unit with sole responsibility for tracking and addressing geopolitical developments. Instead, a cross-functional, sometimes company-wide approach is needed to devise effective strategies that account for geopolitical risks. There is no one-size-fits-all approach. Depending on the company, this may involve collaboration between public affairs, strategy units, and other relevant departments.

Maintain perspective on geopolitical risks

While geopolitical disruptions can be significant, businesses need to recognize that these disruptions are often localized, and growth opportunities may exist in other regions. Identifying under-served market segments in less geopolitically contested regions – such as Latin America, Sub-Saharan Africa, and Southeast Asia – can mitigate the impact of geopolitical tensions on business operations in other geographies. This challenges the prevailing narrative of deglobalization, suggesting that it’s being rewired rather than retrenched. Certain regions remain relatively insulated from geopolitical rivalry.

“Acknowledge the keen impact of intensifying geopolitical rivalries on various aspects of operations and performance.”

Conduct scenario planning

Scenario planning exercises can help businesses future-proof their operations and investments against potential disruptions. By considering various contingencies over a 10–25-year timeframe, such as geopolitical conflicts or political transitions, companies can better prepare for uncertainties and mitigate risks. Differentiating between long-term strategic positioning and short-term contingencies (the potential re-election of Donald Trump as US President this year is top of mind for many executives, as is China’s threat to forcefully reunite with Taiwan if it resists unification indefinitely) can help companies effectively plan for a range of scenarios. Longer term, the climate transition is a key priority for many executives.

Define geopolitical risk appetite

Businesses must explicitly discuss and define their tolerance for geopolitical risks to inform decision-making and risk management strategies. Assessing the potential impact of geopolitical developments on operations and weighing them against the costs of mitigation measures can help companies determine their risk appetite. This involves evaluating the trade-offs between staying in regions of geopolitical tension versus relocating operations. For example: reconfiguring supply chains, with some firms repatriating production due to the fallout from COVID-19, often leads to higher capital costs.

Engage with officials early

Leveraging their teams’ expertise, businesses can engage with policymakers early in the process of policy formulation to help generate more effective and efficient policy decisions. With their informational advantage, companies can provide valuable perspectives on the potential consequences of policy choices and help shape more favorable outcomes for firms. However, it’s crucial to engage with officials in a constructive manner that avoids appearing self-serving.

Collaborate with industry peers

Collaboration with other businesses and industry associations can be instrumental in promoting stability in geopolitical relations and de-escalating tensions. By joining forces, businesses can amplify their voices and advocate for policies that foster cooperation and mitigate the risks of geopolitical conflict. This collaborative approach can also provide insulation from political backlash, particularly for companies operating in sensitive sectors like semiconductors or pharmaceuticals.

Overall, as geopolitical tensions continue to shape the global business landscape, proactive and strategic approaches are essential for any multinational firm. By recognizing the significance of geopolitical rivalry, enhancing understanding, avoiding siloed responses, maintaining perspective, conducting scenario planning, defining risk appetite, engaging with officials, and collaborating with industry peers, businesses can better position themselves to withstand geopolitical disruptions.

Five ways companies are responding to geopolitical risks

Reconfiguring supply chains:
This entails evaluating alternative sourcing locations and supply-chain setups. The COVID-19 pandemic has accelerated this trend, with many executives considering reshoring or diversifying supply chains. North American companies, including those with operations in Mexico, highlight the trend of bringing sourcing back to their region. However, reshoring is just one option, with firms weighing factors like economies of scale and supplier reliability, too. 
Reassessing exposure to key markets:
This is especially the case with China, because of changes in local business policies and US export controls. Options range from developing specific strategies for China to scaling back or exiting the market altogether. However, complete decoupling from China remains unlikely due to its global economic significance.
Relocation of R&D facilities:
Some firms are considering this, provided the alternative locations offer access to skilled talent and supportive infrastructure. However, sanctions rules may pose challenges to talent management, precluding certain nationals from contracting with banned entities or buying and selling forbidden technologies.
Market-by-market assessments:
Rather than quitting markets outright, some companies opt for these assessments to accommodate local policies. This approach allows for tailored responses, with operations continuing in some areas while potentially withdrawing from others. Engaging with officials imposing restrictions can be a viable strategy, particularly when multiple policy avenues exist.
Developing new revenue streams:
Firms targeted by sanctions are investing in R&D to develop new sources of income. Enhanced value propositions are crucial for retaining and attracting customers. Emerging markets, where governments remain neutral in geopolitical disputes, offer expansion opportunities. 
Previous slide
Next slide

This article is based on the white paper Geopolitical Rivalry and Business: 10 Recommendations for Policy Design by Simon Evenett and Nicolai Ruge, published by the World Economic Forum in May 2024.


Simon Evenett

Simon J. Evenett

Professor of International Trade and Economic Development at the University of St. Gallen

Simon J. Evenett is currently a Professor of Economics at the University of St. Gallen and on 1 August 2024 will join the Faculty at IMD. He is also  Co-Chair of the WEF’s Global Council on Trade & Investment and the Founder of the St. Gallen Endowment for Prosperity Through Trade, home of two of the leading independent monitors of how governments shape international business.


Learn Brain Circuits

Join us for daily exercises focusing on issues from team building to developing an actionable sustainability plan to personal development. Go on - they only take five minutes.
Read more 

Explore Leadership

What makes a great leader? Do you need charisma? How do you inspire your team? Our experts offer actionable insights through first-person narratives, behind-the-scenes interviews and The Help Desk.
Read more

Join Membership

Log in here to join in the conversation with the I by IMD community. Your subscription grants you access to the quarterly magazine plus daily articles, videos, podcasts and learning exercises.
Sign up

Log in or register to enjoy the full experience

Explore first person business intelligence from top minds curated for a global executive audience