How to Strategize in an Out-of-Control World
In 2025, political surprises are adding fuel to the fires of business uncertainty, complexity, and volatility. Here’s how leaders can navigate this special type of risk.
Carolyn Geason-Beissel/MIT SMR | Getty Images
During the past few years, company strategies have been disrupted repeatedly by major shocks like the COVID-19 pandemic, the outbreak of war in Ukraine and the Middle East, and breakthroughs in generative AI. In the first months of 2025, a stream of political surprises has been impacting company agendas — and further upheavals seem likely.
This turbulence is having a real impact on business: Our analysis of nearly 7,000 organizations over a 20-year time frame shows that variance in company profitability can increasingly be attributed to factors that lie beyond the company and its industry. (See “What Shapes Profitability?”) Contextual factors — like geopolitics, technology, and climate — now account for 43% of the variation in the net profit margins of public corporations.
Increasingly, politics is the generator of surprises that reverberate in boardrooms around the world. After the Second World War, countries in most of the Western world embraced economic growth as a primary goal, which went hand in hand with national governments’ support for business activities. Today, with increasing social and political division within many countries and rising geopolitical tensions between them, this support can no longer be taken for granted.
How, then, can CEOs and their teams navigate the current era of political disruption? They must understand and strategize for political risk. Let’s explore how.
Why Current Political Risk Is Different
Political risk is materially different from other risk factors in several important ways.
High frequency. Unlike pandemics or economic shocks, political influence can create significant disruption on a regular cadence. In the digital age, new policies can be announced, modified, and reversed daily, compelling companies to convene war rooms and react in real time.
Multidimensional. Policy changes can affect businesses on multiple dimensions.