A stark warning has been issued to the global business community: the comfortable strategy of 'wait and see' is no longer viable in a world where geopolitical threats have reached an unprecedented peak. According to a major new study, companies must now treat geopolitical insight as a fundamental business capability, on par with finance or marketing.
Geopolitical Disruption Becomes the Norm
The report, produced by the IMD Business School and the World Economic Forum in collaboration with the Boston Consulting Group (BCG), reveals that concerns over global policy uncertainty hit a 20-year high in 2025. Business leaders consistently point to the reconfiguration of trade, the weakening of multilateral institutions, and the increasing weaponisation of economic tools as persistent dangers to their operations and competitive edge.
Despite this alarming landscape, the research found that fewer than 20 per cent of companies have established a dedicated department to manage geopolitical risk. Most firms remain stuck in a reactive cycle, addressing crises as they erupt rather than building systemic resilience. This vulnerability is underscored by a separate warning from Lloyd's of London, which estimates a potential geopolitical conflict could trigger $14.5 trillion (£11.89 trillion) in global economic losses over the coming five years.
From Headlines to Core Capability
"Too many companies treat geopolitics as a headline issue rather than a business capability," stated Nikolaus Lang, Global Leader of the BCG Henderson Institute and a co-author of the report. He emphasised that the current ad-hoc approach is unsustainable. Simon Evenett, Professor of Geopolitics and Strategy at IMD and another co-author, echoed this, asserting, "Geopolitics isn't just for diplomats. It needs to be a top priority for business leaders."
The report, released ahead of the World Economic Forum's annual meeting in Davos, also delivered a sobering assessment of technological solutions. It noted that the usefulness of emerging AI tools for geopolitical sensing "remains limited", indicating that human expertise and structured processes are irreplaceable. Furthermore, the analysis confirms there is no universal blueprint for success; companies are pursuing various models, from task forces and senior advisers to full-time dedicated teams, often housed within government or corporate affairs functions.
A Call for Strategic Integration
The recent spike in tensions following former President Trump's operation in Venezuela has only heightened investor anxiety, pushing geopolitical strategy higher on corporate agendas. The central conclusion for executives is clear: in an era defined by disruption, building an embedded, proactive geopolitical capability is no longer a luxury for a few but a critical necessity for all. The time for passive observation is over; the era of strategic anticipation has begun.
