Global politics and AI are upending business as usual. Here’s how board members are using diverse expertise to help companies succeed.
Tariffs, Ukraine, artificial intelligence—heightened geopolitical risk and unprecedented technological advancements are making it harder than ever for corporate boards to strategize long-term. Forget the next five years; even the next five months seem uncertain.
“It’s an understatement to say that, geopolitically, the world is dramatically a different place from what it was just five years ago,” says John Rodi, partner and co-leader of KPMG’s Board Leadership Center. “The scope and complexity of issues today have implications for all companies—no matter what size you are.”
Companies without a global footprint can no longer afford to ignore overseas headlines. They’re leaning on expertise from an advisory group that has traditionally focused only on the bottom line—board members.
Facing unprecedented changes in the macro environment, boards are responding by expanding their purview. They’re doing deep dives into fields like labor, energy, and water, all sectors impacted by geopolitics and AI. They’re bringing in independent experts to offer the latest insights, hoping to keep an edge as industries are upended—often dramatically. They’re also gaming out mock scenarios to determine how best to respond to the latest shock headline that’s always seemingly around the corner, creating a proactive, rather than reactive, approach to handle unforeseen scenarios.
“Of all the disruptors, the next iteration of generative AI—agentic AI—will likely prove to be the most transformative and lasting one of all,” Rodi says. “Boards need to understand their company’s strategy in this regard.”
Atlantic Re:think spoke about how corporate boards are navigating geopolitical risk, including AI, with Rodi.
Atlantic Re:think
01
The world seems to be full of uncertainties today, with levels of change that are unprecedented. How should companies view this new landscape?
John Rodi
At a macro level, the world is seeing a continued shift from an era of convergence—a coming together on trade, capital, labor, and even accounting standards—to one that is defined by fragmentation and country-first policies. Political polarization is amplified by social media and AI-driven disinformation. National security issues are driven by supply chain and investment restrictions. And national industrial policies are constraining industries and making future planning challenging.
For most companies, geopolitical risk has been historically viewed and tackled in terms of discrete risk events, like spikes in energy costs due to a war in the Middle East. But this new landscape has dramatically changed how companies think about geopolitics and geo-economic risk. The COVID pandemic opened eyes to how interdependent the global economic system has become. Tariffs, agentic AI, the tech Cold War with China, the ongoing war in Ukraine, and Middle East state-sponsored cyber-attacks—all of these issues have implications for most companies today, whether you’re a multinational business or not. And agentic AI—an AI system capable of accomplishing complex tasks with limited supervision—will likely prove to be the greatest disruption.
Atlantic Re:think
02
How can companies strategize for so many variables?
John Rodi
First and foremost, it’s about companies not being caught flatfooted. You must be proactive and game out scenarios so you’re better prepared to shift as events and conditions change. Companies often tend to react reflexively to the events of the day. But thinking and planning proactively tends to promote a more measured approach, giving a company the confidence to wait-and-see rather than being frenetic. Because if a company doesn’t engage in that type of readiness exercise, then when something happens in the moment, it’s perhaps too late to come up with a plan.
Atlantic Re:think
03
How are boards helping companies strategize for AI?
John Rodi
Boards should challenge a company’s AI strategy to help leaders see the big picture. Instead of focusing on efficiency with automation, ask about the company’s long-term strategy for using it to better interact with customers. For example, should a company adjust its client-facing applications to more deeply penetrate a customer base that perhaps they’re not touching? It’s about going beyond the base level use of AI to understand what’s ultimately going to create real change. To be effective in doing that, the board needs to understand the global political landscape, including AI regulations and guardrails, which are likely coming first in Europe, then here. They also need to track national policies that are shaping the AI sector, all of which offer important context for corporate decisions and strategies.
When we talk to boards, we talk about the importance of learning how to use AI through consultants, thought leaders, and experimenting with it themselves. Personal use is very important. It gives you a sense of how these tools work, how they’re prompted, and how they may give wrong information if not challenged and vetted. It’s the responsibility of board members to really elevate their game and learn.
Atlantic Re:think
04
How does the KPMG Board Leadership Center help directors and business leaders navigate geopolitical risk, including AI?
John Rodi
Our mission is to share our perspectives, insight, and knowledge. We have a great team here at KPMG with significant corporate governance experience over many decades who help our clients connect the dots between the macro political trends and the business challenges they face. We bring KPMG expertise to the table to help with strategic scenario planning, due diligence, and geopolitical risk management. We also convene corporate directors to share what they’re seeing and what they’re doing around geopolitical risk. Those small convenings that we host with partners like the National Association of Corporate Directors help directors get a different perspective from their peers and share information in a forum where they can feel comfortable knowing it won’t be publicly repeated with any attribution.
Atlantic Re:think
05
How do you help boards improve their effectiveness?
John Rodi
We help boards think about how the board is challenging management to have robust processes in place to identify and manage geopolitical risk—mapping it to key revenue and cost drivers. This establishes clear responsibility for developing a mitigation plan for each risk and then ensuring that there’s robust reporting to the board. We also help boards obtain a good diversity of perspectives, including third-party expert views regarding the company’s geopolitical risk. Considering the board’s own political acumen holistically—how many of them have real experience with the geopolitics of business—is an increasingly important question.
The value of our insights is as much about understanding each company’s challenges and their business context, which can differ dramatically from one to the next. That’s why having a clear governance framework and a process around geopolitical risk is so valuable.
Atlantic Re:think
06
Where do you see the future of navigating geopolitical risk going?
John Rodi
The one thing we can count on is that geopolitical risk will continue to be more complex and even more challenging to manage in the future. I think boards will always want broader business acumen first and foremost and probably don’t want to get too niche with their skillsets. But I also think that you’ll see boards starting to add more geopolitical experience to their skills, and this demand will continue to grow. And if they can’t get that from a board member, then they’ll look to get that externally.
