Geopolitics always played a role in companies’ planning, but its importance has increased to such an extent that it is necessary to create new roles and demands within the corporation.
Until recently, business risk management operated under the fundamental assumption that economic activity would unfold within a relatively stable, rules-based, largely predictable international system. After at least two decades, an international investment environment with these characteristics is now a thing of the past. The Geopolitical Risk in Trade Index (GPRT) increased by about 30% from 2020 to 2024. Over the same period, the Global Supply Chain Pressure Index (GSCPI) almost tripled.
It is estimated that the losses of foreign companies that suddenly ended their operations in Russia, after Putin’s invasion of Ukraine in February 2022, exceed $170 billion. The case of BP, which wrote off $25.5 billion, was typical. Meanwhile, TikTok is facing the threat of a divestiture in the US, with ByteDance fragmenting the company’s global operations.
The disruption of international cooperation is also having an impact on the cybersecurity sector, with cybercriminal organizations that often express national interests targeting a range of businesses, causing leaks of financial resources and data. In the context of geopolitical conflict, sanctions, tariffs and export controls are now commonplace, increasing costs and losses for the business sector.
US regulations on Huawei smartphones alone are estimated to cost the Chinese company around $30 billion annually. Armed conflicts and geopolitical confrontation account for 31% of business fears, as expressed in the World Economic Forum’s 2024-25 survey.
Within this backdrop, the most modern corporate governance practices have been based on the conclusion that the challenges now raised by the geopolitical environment are not simply covered by structures such as chief risk officers who focus on financial and operational issues or government affairs departments that manage compliance and lobbying.
Studies argue that the position of chief geopolitical officer should have the importance accorded to roles such as chief risk officer and chief security officer.
