Board Priorities in 2025: Geopolitical risks
16 January 2025
Understanding the business impact of geopolitical risks
In a world of ongoing and significant global challenges, Boards must manage and mitigate proactively the complex risks which geopolitical issues present. By taking decisive action on this issue, Boards can strengthen their operations and ensure long-term resilience.
Key strategies for Boards to consider include:
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Undertake a geopolitical risk assessment and produce data-driven insights
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Scenario planning and crisis management preparation is key
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Integrate supplier management into your risk management framework
- Mitigate financial risks
- Mitigate legal risk
Continuously evaluate the geopolitical risks in regions where your business operates. This includes monitoring key factors such as political stability, social unrest, trade policies, international relations, military tensions, and the regulatory landscape.
Stay informed about political developments, elections, legal reforms, and macroeconomic trends in markets critical to your business model. Build a network of local experts—political analysts, consultants, and lobbyists—who can provide early warning signs of emerging risks. Additionally, monitor broader geopolitical shifts, such as changes in alliances, conflicts and new trade agreements, to assess potential impacts on market access, supply chains and client relationships.
Create a range of scenarios based on potential geopolitical events—such as regime changes, sanctions, natural disasters, or regional conflicts—and evaluate their possible impact on your business. Use these scenarios to test your organisation’s resilience and readiness in the face of adversity.
Develop comprehensive crisis management and contingency plans that include clear communication protocols and operational continuity strategies. Ensure leadership and key personnel are trained regularly to make swift, informed decisions during crises. This will help to minimise business disruptions and protect organisational value
Strengthen the resilience of your supply chain by integrating supplier management into your broader risk management strategy and framework. This approach should be tailored to each supplier’s risk profile and the criticality of their role in your operations.
Conduct thorough assessments of supply chain flexibility, focusing on risk events, recoverability, substitutability and geographic diversification to reduce reliance on single-sources or vulnerable regions. You can read more on this issue here.
Leverage financial instruments such as currency hedging, commodity hedging, and political risk insurance to protect your organisation from volatility in exchange rates, trade barriers and nationalisation risks.
Consider establishing dedicated contingency funds to address financial disruptions caused by geopolitical events, such as sanctions or economic instability, ensuring your business is financially equipped to weather unforeseen challenges.
Understand the legal requirements attendant to supply chain management and their potential impact, including on your reputational and the risk of disruption in your supply chain. Awareness of the shifting sands of trade sanctions and restrictions is also key.
Read about the other Board Priorities for 2025
