Preparing for the unpredictable

For years we treated geopolitics as weather. It came through, disrupted things for a quarter or two, and strategy carried on more or less as before. An election reshuffled the regulatory picture. A conflict rattled a market. Boards paid attention, but usually as an event layered on top of strategy, not as something baked into the assumptions underneath it.

That no longer describes how most boards operate. I've sat in on a lot of these conversations recently, including our latest Competent Boards Global Forum, and the tone has shifted. Trade policy, export controls, sanctions, industrial policy, regional conflict - none of it reads as background noise anymore. It shows up in where a company invests, how its supply chain is built, which technologies it can actually get its hands on now and in the future, where its data is allowed to be hosted, and how far it's willing to go in balancing a commercial opportunity against its own stated values.

Boards are not supposed to be forecasters, and I'd push back on any suggestion that they should try. That was never the job, and treating it as the job just burns time on prediction instead of preparation. The actual job is making sure the organisation understands how a shifting geopolitical backdrop could pull the rug out from under the assumptions its strategy rests on. That's a governance question. It has nothing to do with whether anyone in the room can call the next election or the next conflict correctly. It is about being prepared for the unpredictable. This is where stewardship matters most: not predicting the future with certainty, but preparing the organisation to thrive across a range of plausible futures.

Most global businesses no longer operate as one undifferentiated global machine. Manufacturing is regionalising. Sourcing for critical components is spreading out, sometimes deliberately duplicated across regions even where that costs more. Technology infrastructure, and who gets to make decisions about it, are being reorganised along regional lines too. It's not that efficiency has stopped mattering; it's just no longer allowed to dominate the equation on its own. Boards are spending real time weighing it against resilience and optionality, more than they were even three or four years ago.

One habit I'd like to see boards drop is treating geopolitical exposure as a revenue-by-geography exercise: where do we sell, and how much comes from where? Useful, but thin. What tells you more is a proper dependency map:

• Where the critical suppliers physically sit;

• Which jurisdictions host the critical infrastructure the business can't operate without;

• How dependent the company is on particular transport routes;

• Where the raw materials actually come from; and

• Whether several different parts of the business are quietly exposed to the same political environment without anyone having noticed.

Add climate and nature dependencies, together with changing demographic trends, and the picture becomes even more complex. Do that exercise honestly and the risk picture usually looks quite different from the revenue map. It also tends to be where the more interesting board conversation actually starts.

What's worked well in the boards I've watched is selecting a small number of external indicators, such as shifts in trade policy, export controls, foreign investment restrictions and energy security, and tracking them as a pattern over time instead of jumping every time a headline lands. Reacting to headlines is exhausting, and it doesn't produce good governance. It's also worth stress-testing scenarios that are genuinely uncomfortable, not just mildly inconvenient ones. Are we building our outlook on assumptions that will be questioned a few years from now?

Some of you have heard me speak about a time when people smoked on airplanes and, companies could legally deduct bribes paid to foreign public officials as a business expense. Today, lighting a cigarette on a commercial aircraft could lead to arrest. Paying a bribe could lead to prison, the loss of your business and lasting reputational damage. The world changed far more quickly than many organisations expected.

That, I believe, is one of the most important questions for every board. Governance is not simply about complying with today's rules. It is about anticipating tomorrow's expectations before they become tomorrow's regulations.

Historically, geopolitical issues often sat within enterprise risk management or compliance, supported by periodic updates from legal, government affairs or specialist teams. Those functions remain important, but increasingly they capture only part of the picture.

Many boards are finding that geopolitical considerations need to be built directly into strategy papers, investment proposals, M&A decisions and capital allocation discussions, where directors can see not only the recommendation itself, but also the assumptions that underpin it and the conditions under which those assumptions might change.

That requires much earlier collaboration across strategy, finance, operations, technology, legal, government affairs, sustainability and risk. When each function analyses the same geopolitical development in isolation, the board receives separate updates rather than an integrated assessment. In a more fragmented operating environment, directors need a joined-up view of how these issues interact before decisions reach the boardroom.

It has become clear that disruption can come from a government decision just as easily as from an operational failure. Export controls, sanctions, trade restrictions and regional conflict have all made that point. And resilience isn't free: diversifying suppliers costs more, regional manufacturing gives up some scale, holding inventory ties up capital, and spare logistics capacity looks wasteful right up until it doesn't. I don't think the answer is maximising resilience everywhere - that's neither realistic nor a good use of capital. The better question is where resilience actually creates long-term value, and where accepting the risk is the better decision. That's a risk-appetite conversation, and it belongs at board level.

More boards are being explicit now about the conditions under which they'd choose not to enter a market, or would scale back, or would leave altogether, and about where they actually have commercial flexibility versus where certain commitments simply aren't up for negotiation. That clarity matters most when legal, political and commercial signals point in different directions. And when the trade-offs get hard, people notice whether what an organisation says matches what it does. At that point values stop being a slogan and start functioning as operating guidance.

Against that backdrop, the quality of the board conversation becomes increasingly important. These are some of the questions boards may wish to consider as they navigate a more fragmented operating environment:

• Which assumptions about trade, market access and political stability is our strategy still built on, and when did we last test them?

• Where are our real geopolitical dependencies, once we look beyond revenue exposure to suppliers, infrastructure, financing, talent and partnerships?

• What scenarios are shaping our planning, and which decisions hold up across more than one of them?

• Which leading indicators are we monitoring, and how quickly do we respond when they change?

• Where has chasing efficiency quietly built in more risk than we realised?

• How visible are geopolitical assumptions in our capital allocation decisions?

• Where might all this create an opportunity rather than just a threat?

• What principles do we treat as genuinely non-negotiable, wherever we operate?

• Are we actually getting one integrated picture of all this, or a stack of separate updates from different functions?

None of these has a tidy final answer, and that's rather the point — they are meant to keep the conversation honest and visible.

Geopolitical complexity isn't going away. It'll move at different speeds in different places, but political, economic, technological and environmental shifts are becoming more tangled up with each other. None of that means boards need to get better at predicting what happens next. If anything, the organisations I rate most highly have given up trying.

However, there is another important part of the governance conversation. Many of the same forces that are creating uncertainty are also reshaping where growth and investment are taking place. Industrial policy, infrastructure investment, regional trade agreements, demographic shifts, changing patterns of technology development, and climate and nature considerations are creating new opportunities alongside new risks.

Some jurisdictions are becoming more attractive because of their political stability, access to talent, natural resources or role within emerging supply chains. Others are investing heavily to strengthen domestic industries or attract strategic sectors.

Increasingly, boards are asking not only where the organisation is exposed, but also where these shifts might create new avenues for growth, investment or partnership. That does not mean chasing every emerging opportunity. It means periodically revisiting long-held assumptions about where future growth is most likely to come from and whether geopolitical changes have altered that picture.

There is no single playbook for governing geopolitical uncertainty, and every organisation will face different choices. What matters is creating conditions for thoughtful discussion, well-informed judgement and value creation.

What conversations should your board be having today that it wasn't having just two years ago?