Companies Forced to Confront Geopolitical Risks

When JPMorgan Chase CEO Jamie Dimon talks, people in the business world listen. Some of his remarks in the banking giant’s latest earnings release sent a chilling message.

“We have been closely monitoring the geopolitical situation for some time, and recent events show that conditions are treacherous and getting worse,” Dimon said. “There is significant human suffering, and the outcome of these situations could have far-reaching effects on both short-term economic outcomes and more importantly on the course of history.”

Conflicts in the Middle East. Russia invading Ukraine. The lingering effects of the Covid-19 pandemic. Hostile foreign governments armed with nuclear weapons. Tensions between the U.S. and China. A rising tide of nationalist movements.

Any one of the major geopolitical risks we’re now facing would be enough to cause unease among both government and business leaders. Their convergence feels like what global political strategist Tina Fordham, founder of consulting firm Fordham Global Foresight, describes as a “geopolitical risk supercycle.” According to a growing number of international analysts like Fordham, such trends are wrecking worldviews colored by two decades of geopolitical stability between the fall of the Berlin Wall in 1989 and the financial crisis of the late 2000s.

In a report on the top geopolitical risks of 2024, business intelligence firm S&P Global pointed out that the effects of globalization are drawing increased scrutiny; hence the growing interest in nationalism and protectionism around the world. Shocks to supply chains caused by the Covid-19 pandemic and the war in Ukraine revealed the fragility of the global economic ecosystem, for example. Meanwhile, the firm noted that frustrations are mounting worldwide over the inability in the name of economic growth to address the increasingly perilous effects of climate change. Against such a backdrop, the supposed benefits of globalization take on less appeal.

For executives trying to guide companies through such a fraught period in history, conventional corporate leadership strategies don’t seem to apply. Importantly, people are grappling with more than economic issues. When you’re talking about the proliferation of armed conflicts and an increase in natural disasters, the concerns are existential.

Now, it appears companies don’t even know how to talk about the issues, much less do anything about them. Where corporate boards once felt pressured to take a stand on matters like voting rights, diversity and inclusion, and the environment, staying mum on hot-button topics is coming back into fashion – better to say nothing than risk upsetting stakeholders with competing agendas, it would seem.

“Business leaders need to position their organizations for uncertainty,” warned the McKinsey Global Institute in an analysis published earlier this year on the intersection of geopolitics and global trade. What does that entail? Sounds like it is up to CEOs to figure it out for themselves.