The corporate world must adapt to a new era defined by multiple risks and uncertainty.
In January 2023, in the cold and beautiful city of Davos, Warburg Pincus investment fund chairman Charles Kaye stated: “Geopolitics, which had been on the margins of globalization, is now front and center in investment decisions.” That phrase captured the spirit of the multinational corporate world, shaped by trade tensions between the US and China since 2018, and later—throughout 2022—by the economic impacts of Russia’s invasion of Ukraine.
With the end of the Cold War and the rise of hyper-globalization, “political risk” for the business world was a problem largely confined to capital and firms operating in emerging markets, where governments were prone to suddenly changing the rules of the game—the so-called legal certainty. Uncertainty stemmed from nationalizations and expropriations, capital controls, political instability, coups d’état, or civil wars that affected the business environment for those seeking returns in developing economies.
However, in the last decade, political risk and uncertainty have moved from the periphery to the center and heart of the system. The world is experiencing the return of geopolitics—that is, the return of competition between great powers in pursuit of influence, power, and ultimately, in the perception of many governing elites, state survival itself. The key feature of the current historical moment is that rivalry between states is taking place under an unprecedented level of economic interdependence between countries (global trade in goods represents 60% of world GDP) and between large corporations whose main profits depend on cross-border flows.
A geopolitical conflict is, at best, a zero-sum game: one side’s gains are the other side’s losses. In contrast, trade and production under globalization—global supply chains and production fragmentation—have been understood as a variable-sum game: the idea that all participants (countries and companies) benefit, even if unevenly.
Russia pursued a zero-sum game when it decided to cut off Europe’s energy supply. The US adopts a zero-sum logic when it bans technology exports to China, and Beijing does the same when it seeks to disrupt the rare earths market. In this context, not only countries are affected, but also companies operating across different supply chains and investment funds active in various sectors of the real economy.
In the era of geopolitical risk, changes in the rules of the game no longer come from an eccentric Latin American leader; they emanate from the very countries that shaped the material and normative framework of globalization. For markets, uncertainty means the emergence of events that cannot be predicted. The scale of Trump’s announcements on April 2, on Liberation Day, was not priced in by any actor. The impact was such that the World Uncertainty Index (WUI), created by the IMF, reached an all-time high in May 2025.
Major powers are beginning to use a set of economic tools—tariffs, sanctions, export licenses/bans, and subsidies—to pursue geopolitical and national security objectives. While geopolitical logic seeks to ensure control, the idea of “secure trade” (for example, in supply chains) still clashes with markets’ pursuit of efficiency, something increasingly difficult in today’s world.
Faced with this reality, the corporate world is beginning to incorporate geopolitical analysis and monitoring into its decision-making processes. For example, JP Morgan Chase created the “Center for Geopolitics” in April, a unit dedicated to helping clients navigate global challenges.
Likewise, multinational companies in sectors heavily exposed to geopolitical tensions, such as technology, have begun to create divisions aimed at monitoring the geopolitical landscape, building forecasts, planning scenarios, and keeping senior executives informed so they can respond quickly and resiliently to various geopolitical shocks. Some companies are even appointing a Chief Geopolitical Officer to ensure they are prepared to reduce risks and maximize opportunities arising from global geopolitical shifts, whether short-term (e.g., accelerating a production line or stockpiling inputs) or long-term (e.g., deciding where to relocate a factory). For example, Mikko Hautala (a former Finnish diplomat) became Nokia’s Chief Geopolitical and Government Relations Officer in October 2024. Meanwhile, Sebastian Reyn (former Dutch Minister of Defense) was appointed Head of Geopolitics and Global Advocacy at ASML, the company that holds a monopoly on the machines used to design cutting-edge semiconductors.
In short, the corporate world must adapt to a new era defined by multiple risks and uncertainty. Looking at today’s world and what lies ahead, the “Era of Geopolitical Risk” is here to stay.