Growing concern among CEOs has exposed a gap in corporate readiness: many companies can identify geopolitical threats but lack the structures to act on them.
Chief executives agree on few risks as readily as they agree on geopolitics. In an EY-Parthenon survey of 1,200 CEOs fielded in March and April, 56% named it the most significant risk to their business over the next 12 months, up 28 percentage points since September 2025.
Corporate structures, however, have not kept pace with that concern. A January paper from IMD Business School, the World Economic Forum and Boston Consulting Group found that fewer than one in five companies has a dedicated geopolitics department. The contrast suggests that the shortage is not of information about world events but of a way to turn it into business decisions.
Why politics now reaches the budget
The gap matters because geopolitical events increasingly have direct financial consequence. They can affect operating costs, access to markets, investment plans, supply chains and the availability of critical resources.
The World Economic Forum’s Global Risks Report 2026 ranked geoeconomic confrontation, the use of trade, finance and technology as instruments of state power, as the top risk over the next two years.
The Iran war, which began in late February, illustrated the effect: Hapag-Lloyd said in the month of May that disruption around the Strait of Hormuz was costing it about $60 million a week, mainly through higher fuel and insurance expenses.
For companies exposed to similar disruptions, recognizing the geopolitical event is only the starting point. The harder task is determining which parts of the business are vulnerable, what the financial exposure could be and which decisions need to change.
How an event becomes a decision
Moving from an event like that to a decision takes four steps. Sensing means tracking political, regulatory, and security developments. Translation converts a development into exposure by identifying which suppliers, routes, customers, or licenses it affects and how much revenue or cost depends on them.
The decision step applies that analysis, often through scenario planning, which tests whether a strategy holds under several plausible futures rather than predicting one. Ownership connects the steps, because someone must assemble the analysis and bring it to executives or the board. None of these forecasts the next event; it shows which commitments would be costly to reverse.
Where the chain breaks
The chain tends to break at translation and ownership, because geopolitical risk rarely arrives labeled as such. Beth Sibly, who directs a geopolitics program at ESMT Berlin, writes that it surfaces inside ordinary commercial questions, such as where to add capacity or whether a promising customer brings regulatory complications.
Public affairs, procurement, strategy and business units each see part of the picture; therefore, no one may assemble it. The January paper found that more than half of the companies interviewed keep the capability within government or corporate affairs, and that awareness stays disconnected from action unless expressed in commercial terms.
Two factors make this organizational gap harder to close. First, geopolitical shocks increasingly occur frequently and simultaneously, creating a volume of developments that a CEO and board cannot assess independently. Second, attention tends to decline between crises. Simon Evenett of IMD has argued that dedicated teams must demonstrate their value beyond simply preventing or reducing risk.
That means geopolitical risk functions need to show how their work supports business decisions, including investment choices, market entry, sourcing and operational resilience.
What translation looks like
Sibly describes a program participant whose operating model depended on open trade flows and a few critical routes. Rather than forecast the next disruption, the company assessed which routes were most exposed, mapped where activity could be rerouted, and tested where flexible capacity would justify its extra cost. The account involves one unnamed company, so it shows a method, not a trend: a general worry about trade became a set of specific commitments, each weighed against the cost of protecting it.
Who should own geopolitical risk?
Who should run that work remains unsettled, as the paper found no single blueprint, with companies using task forces, senior advisers or full-time teams, but reported that teams with direct access to leadership were more likely to influence outcomes. Outside advisers can support sensing, but translation requires knowing which of a company’s own commitments rest on a political assumption, and only the company has that knowledge.
A test for executives
For each long-term commitment, executives can ask which political assumption it depends on and who is responsible for watching it. A company that cannot answer has awareness without the capability to act on it. Answering has a price: second suppliers and spare capacity reduce efficiency in normal conditions; a trade-off executives must weigh against costs such as Hapag-Lloyd’s.
The evidence supports a limited conclusion, as the executive’s report raises concern, yet few companies have a dedicated geopolitics department; therefore, it is unclear who converts events into exposure and brings it to decisions. The sources do not show whether building the capability improves results.
