Frankfurt
Adapting Your Board to the New Geopolitical Landscape
For Chairs, CEOs, and Board Members, geopolitics is no longer a peripheral concern—it is a cornerstone of strategic decision-making. The global landscape is being reshaped by three fundamental forces:
- Economic: Nations are increasingly shifting away from sweeping globalization and focusing on more localized partnerships, emphasizing trade within their own spheres of influence.
- Political: We are seeing a move from integration to fragmentation, driven by rising nationalism and intensifying competition among major powers.
- Sociological: Fear and anxiety are fueling emotional reactions that frequently overshadow data-driven, fact-based approaches to decision-making.
Boards must navigate Cross-Border Regulation to effectively position themselves in this evolving geopolitical landscape. Despite deep cross-border ties—exports as a percentage of GDP have doubled since 1990, and trade in intangibles (e.g., data, intellectual property) is growing twice as fast as trade in goods—the world is becoming more geopolitically fragmented. Diverse governance models and competing power centers are reshaping global markets, forcing businesses to adapt. This underlines the importance of Geopolitical Risk for Boards aiming to maintain a stable global footprint.
Building on Dr. Joseph Nye’s insights¹, a distinguished Harvard political scientist, today’s global order operates across three distinct dimensions:
- A unipolar military realm, where the United States remains dominant.
- A tripolar economic system, led by the U.S., China, and the European Union.
- A multipolar political reality, where emerging “middle powers” like India and Saudi Arabia exert increasing influence through strategic nonalignment.
This fragmentation is not just a challenge but an inflection point. As Christine Lagarde, President of the European Central Bank, noted in 2023, “trade fragmentation could see the flow of goods and services increasingly being pulled towards different trade blocs, at the expense of countries outside those blocs. By leveraging our regional strengths, Europe can recreate some of the benefits of globalisation on a smaller scale”.² Amid such Political Volatility, Geopolitical Risk for Boards intensifies as companies reevaluate their global strategies.
In the U.S., the Biden Administration’s Inflation Reduction Act and the prior “America First” policies underscore this shift toward regional self-reliance. Meanwhile, China’s Belt and Road Initiative continues to strengthen regional trade networks in Asia, Africa, and beyond. The result? A polarized economic environment, marked by increasing tariffs, state-subsidized technology races, and exclusive raw material alliances. Cross-Border Regulation frameworks are likewise evolving in response to these major shifts.
Boards Must Act: From Risk Mitigation to Strategic Opportunity
In this increasingly unpredictable global order, geopolitical risk is now a top Board agenda item. Yet, while the risks are real, so too are the opportunities. Forward-thinking Boards will not only shield their companies from geopolitical turbulence but also unlock new sources of value – by entering emerging markets, diversifying supply chains, and outpacing competitors who react too slowly.
However, our latest global Board report³ reveals a confidence gap:
- Only 21% of directors strongly agree that their Board understands how geopolitics affects value creation.
- 29% remain neutral, while 23% actively disagree – a concerning signal for corporate governance.
- Directors of large corporations (>USD 10 billion revenue) tend to have a stronger grasp of geopolitical shifts, yet emerging-market Boards are notably more proactive in addressing geopolitical disruption than their developed-market counterparts.
Strengthening Geopolitical Governance can help close this gap and better position companies in turbulent times. Boards that want to fully leverage geopolitical disruptions must move beyond immediate risk management and integrate geopolitical foresight into long-term strategy. This means embedding geopolitical intelligence into corporate governance, investment decisions, and strategic planing. The challenge is clear: Geopolitical complexity can either be a Board’s greatest liability or its most significant competitive advantage. Which side will your Board be on?
In today’s volatile world, Boards can no longer afford to be passive observers of geopolitical shifts. Instead, high-performing Boards proactively embed geopolitical resilience into their governance model and actively shape their company’s response. Effective governance is no longer just about risk mitigation – it demands strategic foresight, agility, and proactive positioning. The difference between Boards that lead and Boards that struggle? Resilient Boards don’t wait for disruption to force their hand. Instead, they anticipate shifts, adapt their strategies, and seize emerging opportunities. To turn geopolitical complexity into a competitive advantage, high-performing Boards focus on five key areas.
Who?
1. WHO: Do We Have the Right Board Composition and Competencies?
A Board’s ability to manage geopolitical complexity depends on who is sitting at the table and how effectively they work together. High-performing Boards:
- Adapt Board evaluations to assess geopolitical competency – Traditional assessments often focus on governance effectiveness but overlook geopolitical acumen. Board evaluations should include scenario-based testing of risk foresight, decision-making agility, and strategic problem-solving under uncertainty.
- Enhance Board composition with geopolitical expertise – Nomination Committees should explicitly prioritize directors with backgrounds in government, trade policy, regulatory affairs, or international media. These directors can also play a business diplomacy role, engaging key stakeholders in geopolitically sensitive markets.
- Expand the mandate of Board committees – The Risk Committee should formally integrate public policy and regulatory risks into its remit, or a standalone Geopolitical and Public Policy Committee can be created. Compensation Committees can tie a portion of executive pay to successful geopolitical risk management, reinforcing its strategic importance.
- Clarify Board-management delineation – The Board guides strategy and scenario-planning but does not micromanage operational risk controls. It ensures that management has the right capabilities to execute.
Ensuring Cross-Border Regulation expertise on the Board is vital for navigating varying legal landscapes.
Boardroom Question: Does our Board have the necessary expertise and governance structures to engage effectively on geopolitical risk?
What & Where?
2. WHAT: Are We Accessing the Right Intelligence for Strategic Decision-Making?
A Board’s performance depends on the quality and timeliness of the intelligence it receives. To strengthen decision-making, Boards must:
- Create a shared baseline of geopolitical intelligence – Even well-informed Boards face the challenge of different directors consuming different media and perspectives. A centralized geopolitical risk unit should provide structured, aligned briefings to ensure consistent Board education.
- Engage external experts and advisory councils – Boards should either establish a standing advisory council or schedule at least two to three expert briefings per year from former diplomats, military strategists, and trade policy experts. A diversity of perspectives is critical—navigating a multipolar world requires exposure to multiple viewpoints.
- Institutionalize real-time intelligence sharing – Boards should require structured briefings from global business units, risk officers, and external think tanks to ensure a real-time understanding of geopolitical shifts and their impact on corporate strategy.
Such intelligence is crucial for mastering Geopolitical Governance and mitigating external shocks.
Boardroom Question: Do we have a structured, real-time intelligence cycle, or are we relying on fragmented, outdated reports?
3. WHERE: Are We Aligning Our Global Strategy with Geopolitical Realities?
Boards must actively shape market entry, supply chains, and corporate strategy based on geopolitical realities. High-performing Boards:
- Reassess geographic strategy proactively – Boards should ensure management stress-tests market expansion and supply chain choices for geopolitical risks. Should we nearshore operations? Should we diversify beyond volatile trade corridors?
- Hold Board meetings in key strategic markets – Conducting Board meetings in India, Mexico, or key Asian growth hubs enhances first-hand market understanding. However, sensitive locations require careful timing, security planning, and external stakeholder engagement strategies.
- Signal commitment to strategic markets – Holding Board sessions in key emerging markets is not just about intelligence gathering—it also demonstrates commitment to local stakeholders and governments.
This alignment is essential to manage Geopolitical Risk for Boards operating in diverse jurisdictions.
Boardroom Question: Are we proactively aligning our global strategy with geopolitical realities—or reacting when crises force last-minute adjustments?
When & How?
5. HOW: Are We Embedding Geopolitics into Our Governance Framework?
To ensure long-term Board effectiveness, geopolitical risk must be embedded into the core governance model, not treated as a side issue. High-performing Boards:
- Establish a dedicated geopolitical risk unit – The optimal placement varies (Government Affairs, Risk, or Security), but the unit must be empowered to coordinate cross-functional inputs across Finance, Communications, Supply Chain, and Legal.
- Create a cross-functional working group – This group should convene regularly, integrating insights from multiple departments to ensure an aligned, enterprise-wide approach.
- Allocate financial resources for geopolitical preparedness – Boards must approve budgets for external geopolitical intelligence, scenario planning, and advisory services.
- Pair a Board member with the geopolitical unit – A designated Board sponsor should work closely with the unit to ensure insights are strategically framed and relevant for Board decision-making.
Embedding Geopolitical Risk for Boards deeply within corporate structures ensures a holistic risk perspective.
Boardroom Question: Is geopolitics fully integrated into our governance framework, or is it treated as an isolated risk factor?
4. WHEN: Are We Testing Our Readiness Before a Crisis Happens?
Board performance isn’t just measured by how well a company reacts to geopolitical shocks—but by how well it anticipates and prepares for them. Leading Boards:
- Move beyond quarterly reviews – Geopolitical risks do not operate on a fixed calendar. Boards should increase their cadence to monthly updates with ad hoc emergency sessions triggered by predefined risk thresholds.
- Integrate geopolitical stress testing into enterprise risk models – Financial downturns aren’t the only disruptors. Boards should ensure that geopolitical stress scenarios are incorporated into risk modeling and strategic planning.
- Conduct in-depth crisis simulations – Boards should engage in war-gaming exercises to test responses to:
- A sudden trade war affecting supply chains
- A major geopolitical conflict disrupting operations in a key market
- A rapid regulatory shift forcing compliance overhaul
Regular crisis simulations reinforce geopolitical governance practices for early warning and response.
Boardroom Question: Are we testing our decision-making processes in advance, or will we be making critical choices for the first time when a disruption occurs?
Next Steps for Boards: Turning Geopolitical Complexity into Strategic Advantage
Boards that proactively integrate geopolitical intelligence into their governance structures will gain a significant competitive edge. Instead of reacting to crises, high-performing Boards anticipate shifts, adapt their strategies, and seize emerging opportunities. To achieve this, Boards should focus on five key actions:
Board Evaluation and Composition: Strengthening Board Capabilities
- Conduct a comprehensive Board review to assess geopolitical expertise, decision-making agility, and overall Board effectiveness.
- Benchmark against industry best practices to ensure the right composition, structure, and functionality for navigating geopolitical risks.
- Update your competency matrix and enhance Board succession planning with a focus on geopolitical expertise.
Board Governance and Strategic Oversight: Institutionalizing Geopolitical Intelligence in Governance
- Establish a dedicated Board-level geopolitical oversight mechanism—either within an existing committee or as a new Geopolitical & Public Policy Committee.
- Enhance Board dynamics and collaboration to ensure alignment between the Board, committees, and senior management on geopolitical matters.
- Implement structured geopolitical briefings and scenario-based intelligence updates to support informed decision-making.
- Utilize external experts, advisory councils, and peer benchmarking to gain diverse perspectives on global shifts.
Aligning Corporate Strategy with Geopolitical Realities
- Conduct a strategic Board review of geographic priorities to reassess market entry, supply chains, and investment allocations.
- Ensure Board discussions include risk-adjusted opportunity assessments, rather than focusing solely on mitigation.
- Strengthen business diplomacy efforts by engaging with policymakers, industry alliances, and key stakeholders in geopolitically sensitive regions.
Building Resilience and Investing in Continuous Board Development
- Implement in-depth crisis simulations to test Board decision-making under geopolitical stress scenarios (e.g., trade wars, regulatory shifts, political conflicts).
- Develop early-warning indicators and real-time monitoring processes for anticipating potential disruptions.
- Strengthen Board-management collaboration to ensure a clear delineation of responsibilities in crisis situations.
- Establish a Board Office to drive ongoing Board effectiveness and ensure geopolitical issues remain a core strategic priority.
- Provide targeted learning and development programs for Board members on regulatory trends, trade policy, and global risk management.
- Build Advisory Boards with geopolitical expertise to enhance external insights and scenario-planning capabilities.
Boards that take a structured, proactive approach to geopolitical complexity will not only mitigate risks but unlock new sources of value. The question is no longer whether geopolitics matters—it is whether your Board is equipped to navigate and capitalize on this evolving landscape. Now is the time to act.
How prepared is your Board to turn geopolitical risk into strategic advantage? Let’s discuss how a dedicated Board refreshment strategy, a tailored Board evaluation, In-Depth Crisis Simulations, and a governance enhancement program can strengthen your Board’s effectiveness and performance.
Authors
¹ Joseph S Nye Jr., The Future of Power, NY: Public Affairs 2011
² Christine Lagarde, European Central Bank, 2023
³ RefineValue, Global Board Report 2025
