Geopolitical Fallout Rises Toward Top of Key Corporate Risks

Geopolitical conflict has moved into to the upper tier of risks facing company boards, and it’s not going away soon.

Multiple wars over the past few years and recent US military operations in Iran and Venezuela have turned short-term tension over issues like high energy prices and disrupted global supply chains into a core business threat, board consultants say.

In response, boards are bringing in more outside experts than ever, asking new questions of the C-suite, and reshuffling schedules to concentrate more attention to geopolitical strategy.

The number of boards taking action on geopolitical risks tripled since 2021 to 76% in 2025, according to data from EY. Concerns have likely grown since the last surveys were released, with geopolitics joining the ranks of artificial intelligence as the biggest potential company destabilizers, said Nitin Chadda, president of consultancy Teneo’s global political risk advisory.

Macy’s Inc., Lindt, Campbell’s Co., Lennar Corp., and other companies have warned investors the war in Iran could dampen business. Another smattering of corporations also recently flagged instability in Venezuela as a risk.

“What boards have realized in recent years is they need to be prepared for something going on in the world at all times,” said Patrick Niemann, a partner at EY’s Americas Center for Board Matters. “Even once the things resolve that we’re in the midst of right now, they need to be looking around the corner.”

Geopolitical conflict is noteworthy because it lives at the intersection of other risks, said Ray Garcia, partner at PwC’s Governance Insights Center. Supply chains, cybersecurity, and on-the-ground operations are all threatened when international conflict shuts down trade routes or injects fear into the global economy.

Asking the Right Questions

The most successful boards aren’t chasing certainty over the outcome of a given conflict—they’re after the right information to best position their business, said Rich Fields, who leads the board effectiveness practice at Russell Reynolds Associates. Directors should be thinking about what conditions underpin their current geopolitical strategy and whether those could change, he said.

“Those are the boards and the directors that I think feel most confident in an era where it’s very difficult to feel any level of confidence,” he said.

Getting there means pushing management for answers on shipments, contracts, supply chains, and more, Andrew Jones, principal researcher at The Conference Board, said. Simply monitoring isn’t enough under current conditions, he said.

Companies will also have to decide their commitment to certain regions, said Martha Carter, head of governance advisory at Teneo. She pointed to one big geographical question directors should ask management: “Are we in it for the long-term and we’ll take whatever comes, or is it a short-term commitment and we’ll get out of here as soon as we can?”

Management’s ability to answer confidently is paramount, Chadda said.

“The onus is on the CEO and the C-suite to ensure that the group that they surround themselves with, that external counsel or internal counsel or both, is appropriately credible,” he said.

Chadda stressed the importance of scenario planning, where everyone practices their roles in a simulated situation. That could mean identifying vulnerable employees, digital assets, products, supply chains, and more, he said.

“To have a well exercised muscle to respond and react to those changes in the international environment is more important than ever now.”

Creating Effective Boards

Jones said he’s seen a recent uptick in boards adding directors with international experience. But the board as a whole should also be well equipped to handle geopolitical issues, he said.

Instead of seeking directors with narrow expertise, boards should look for people with experience managing a high level of disruption in any form, Carter said. Those skills extend into the many other areas boards are overseeing right now, she said.

Recruiting those who know the pressure of leading a company—recently retired CEOs, for instance, or executives whose company underwent a fundamental transformation during their leadership—are some of the best options, Fields said.

“You do not see that many specialist directors being added to boards in situations like this,” he said. “You’re going to see more boards thinking more strategically and looking for individuals that can contribute not just on one dimension but on many dimensions.”

Even with the right directors, time-pressed board rooms face challenges keeping up with fast-emerging global developments and their implications.

Allocating enough time to account for geopolitical risks is difficult for already overwhelmed board directors, Niemann said. Some are opting to meet more frequently to create additional strategizing time. Directors could also extend meeting times, get daily updates from management, form new committees, or condense agendas to make sure they get enough of the right information, consultants said.

“This is one of those topics that boards are saying, ‘We need to allocate time and attention to this because the upside or downside potential is so significant that it would be a mistake not to,’” Fields said.