Politics is nothing new - companies have long seen their fortunes rise and fall on the decisions of lawmakers and the onset or cessation of wars. Many have become quite good at reacting to events or at least buying insurance to limit risks like expropriation. Teams of lobbyists and public relations companies fight for the opportunity to express the wishes of their client businesses and react to limit damaging events.
However, today's geopolitical environment is nothing like what we've seen in the past. CEOs are beholden to the outputs of an increasingly complex geopolitical system that moves at an accelerated pace, with few guardrails. Outcomes can be hard to predict without careful focus. Time to react is limited. Downside risks may often be too esoteric to adequately insure away. Plus opportunities from political shifts can be exploited by competitors before a CEO even understands what is occurring.
This report reasons that only by moving politics to the forefront of strategy can a CEO adequately steer today's global businesses. Such thinking starts with an acceptance that global companies are assumed political entities and CEOs de-facto political players. It means recognizing that a different approach is required, one that elevates politics in the boardroom and puts it on a par with other strategic challenges. Furthermore it requires CEOs to personally play the role of Chief Geopolitical Officer (CGO), using specialized insights and stress-testing tools to focus the company's attention on managing an increasingly uncertain environment.
Read the full report: The CEO as Chief Geopolitical Officer (PDF 785 KB)
"We need to reposition our businesses more deliberately given a very polarizing political environment. We must be more nimble, recognize the shifting client sentiment in terms of pricing, cyber security and regulatory transparency as well as consumer and corporate activism." Mitchell Harris, CEO of BNY Mellon Investment Management