High Performance Boards, 2nd Edition

CHAPTER 33Board Oversight of Geopolitical Risks and Opportunities

A new, more contentious geopolitical era appears to be unfolding, with the possibility that a once stable and cooperative order is being replaced by a more turbulent and fragmented global landscape.

WEF's Global Future Councils¹

Geopolitical and Geoeconomic Resilience has Moved to the Forefront of the Board's Agenda

In 2023 and early 2024, Bab al-Mandab hit the headlines all over the world when it became the target of drone attacks by Yemen-based Houthi rebel forces. The 20-mile-wide strait became the critical bottleneck in shipping lanes linking the Indian Ocean and the Mediterranean Sea via the Suez Canal, with a quarter of the world's shipping passing along this route.² Many shipping carriers opted for the longer and costlier route around Africa's Cape of Good Hope. Retailers from Tesco to Primark and Maisons du Monde, and automakers including Tesla and Volvo Cars, faced rising freight costs on top of running out of stock and product parts.³

In a global survey in 2023, 93% of multinationals were reporting losses linked to political instability. A ramp-up in deglobalisation and decoupling from China is on the minds of growing numbers of business leaders.⁴ GE, Boeing, GM, and Ford Motor (among others) have been disclosing the risk that US–China frictions add to their business.⁵ In extricating itself from the Russian market and divesting its stake in Russian state-owned oil and gas company Rosneft after the ...