Executive Summary – From Background Noise to a Strategic Variable
For decades, geopolitics was background noise for most business leaders. Wars, economic sanctions, diplomatic tensions — these belonged to the realm of diplomats and foreign ministries. In the corporate world, focus remained on products, customers, markets, and competitiveness.
That world no longer exists.
Geopolitical events are now direct triggers of internal business crises:
-
A conflict halfway around the world disrupts your supply chain within hours.
-
A foreign regulatory change renders a strategic contract obsolete.
-
An extraterritorial sanction impacts your operations in a third country.
The question is no longer “Does geopolitics affect my business?” but rather: “How do we integrate it effectively into our global strategy?”
From Conventional Warfare to Economic Warfare
Military strategists have known for centuries: understanding the terrain is essential to winning. In business, that “terrain” is now as much political and regulatory as it is commercial. Ignoring geopolitical context is like navigating dangerous waters without a map or sonar.
Companies operating internationally are on the front line — facing shifting regulations, cultural complexities, and unstable power dynamics between states. But even a domestic business can be indirectly hit by a conflict, embargo, or commodity shortage, simply because of the interconnected nature of today’s global economy.
Recent Crises: Geopolitics in the Operational Core
In 2022, the invasion of Ukraine disrupted Europe’s energy balance within weeks. Companies dependent on Russian gas scrambled for alternative sources, often at steep costs, with long-term operational impacts.
In early 2024, Red Sea tensions and merchant vessel attacks disrupted Suez Canal shipping. Some companies, anticipating the risk, diverted routes via the Cape of Good Hope, adding ten days to transit times but avoiding total shutdown. Others, less prepared, saw operations paralyzed for weeks.
Even digital businesses are not immune. A European e-commerce firm, using an analytics solution hosted on a U.S. cloud platform, discovered that its customer data was subject to U.S. legal jurisdiction under extraterritorial laws — an unanticipated legal risk that could have been mitigated with early mapping of technological dependencies.
The Case for a Chief Geopolitical Officer
Some experts, including Florent Parmentier of the Institut Montaigne, advocate for a Chief Geopolitical Officer (CGO) role. The mandate would be to:
-
Monitor global political and economic power shifts.
-
Assess their impact on the organization.
-
Recommend action scenarios to the executive committee.
-
Integrate geopolitical considerations into the Enterprise Risk Management (ERM) framework.
This function could be:
-
Permanent in multinationals with significant exposure.
-
Temporary during high-turbulence periods.
-
Integrated into the Chief Risk Officer’s (CRO) remit through upskilling in geopolitical risk.
Why the CGO Alone Is Not Enough
Appointing a CGO is not a silver bullet if geopolitics remains siloed. The real objective is to build a company-wide culture where all strategic functions — legal, supply chain, finance, security, R&D — are capable of factoring geopolitical variables into decision-making.
That requires:
-
Training leadership teams in geopolitical fundamentals.
-
Embedding political scenarios into crisis management exercises.
-
Regular strategic risk briefings to the executive committee.
-
Clear, direct channels between strategic intelligence and C-suite decision-making.
Geopolitics as a Risk Multiplier
All major business risk categories — financial, operational, legal, technological — can be amplified by geopolitical events:
-
Financial shocks: market drops triggered by international conflict.
-
Operational breakdowns: disrupted access to critical components.
-
Legal exposure: sanctions, embargoes, or extraterritorial laws.
-
Cyber threats: politically motivated attacks on infrastructure.
Integrating Geopolitics into ERM
A CRO trained in geopolitical analysis — or supported by a CGO — can:
-
Identify high-impact political risks.
-
Model plausible disruption scenarios.
-
Build contingency plans.
-
Coordinate responses across procurement, legal, security, and communications.
Artificial intelligence can enhance these capabilities by:
-
Detecting early warning signals through OSINT (open-source intelligence).
-
Running predictive scenario simulations.
-
Aggregating real-time political and regulatory data from multiple jurisdictions.
Twenty Critical Questions for CEOs
Before deciding whether to create or strengthen a geopolitical function, every CEO should ask:
-
Do we operate in more than three politically or economically unstable regions?
-
What is our dependency on raw materials sourced from high-risk countries?
-
What percentage of our revenue is tied to markets vulnerable to sanctions or embargoes?
-
Are any of our critical suppliers located in geopolitically sensitive zones?
-
Can our supply chain absorb a sudden blockage?
-
Do we have an up-to-date dependency map for critical operations?
-
Do we know exactly which jurisdictions govern our sensitive data?
-
Have we experienced direct operational or financial impact from geopolitical events in the past three years?
-
Can our legal team track global regulatory changes in real time?
-
Does our CRO team have formal training in geopolitical analysis?
-
Is our strategic intelligence system effective in detecting weak signals before they escalate?
-
Can we accurately model the operational impact of a geopolitical shock?
-
Are geopolitical factors systematically integrated into C-suite decision-making?
-
Does our crisis communication plan include international scenarios?
-
Are we actively scanning for market opportunities created by geopolitical shifts?
-
Can we quickly suspend operations in a country facing sudden instability?
-
Do we know which institutional or private partners can support us in a cross-border crisis?
-
Are we leveraging AI to anticipate geopolitical developments?
-
Does our governance model allow rapid escalation of geopolitical intelligence to top decision-makers?
-
How quickly could we adapt strategy and operations in the event of a major geopolitical disruption?
Conclusion – The Real Question
In a world where uncertainty is the norm, ignoring geopolitics is not a neutral position — it is a strategic risk.
For today’s executives, the core question is no longer “Should we integrate geopolitics into our strategy?” but rather: “How long can we afford to operate without it?”
The answer will define not only resilience but long-term competitiveness in a volatile global environment.
Proactive Risk Management partners with organizations to embed geopolitical intelligence into governance, ERM, and strategic planning — from leadership training and scenario development to building tailored monitoring systems that deliver actionable intelligence to the C-suite.
