Tackling Severe Geopolitical Storms and Turbulences: Needed Corporate Responses


In recent years, many companies have become victims of geopolitical rivalries among countries. Many Chinese companies, for example, have been sanctioned, and even banned from operating in the US as a result of the geopolitical tensions and conflicts between China and the US. Likewise, in the Ukraine War, even Western corporations are severely trapped in the dilemma on whether to pull out their businesses and investments in Russia. Even third-party companies have been trapped, including those doing trading, provide financing and logistics support to their counterparts that are located within so-called “targeted” countries that have conflicts with the US.   

In light of all these developments, the time has come for companies to seriously consider, strategise and act in ways such that their revenues and bottom lines can be protected, and that any collateral and financial damages can be mitigated and minimized. This article will highlight how companies should respond when operating in an increasingly tense and difficult geopolitical environment. 

Corporate Responses Needed

To mitigate against geopolitical risks, I like to propose the following points for the consideration of companies.

1.  Factor in Geopolitical Risks in Corporate Boardroom Decision-Making

Awareness is the beginning of wisdom. As a start, companies must recognize that geopolitical conflicts and tensions among nations are very real today. Their impact and effects are not confined to the countries concerned nor the various entities that operate within their national borders. Take the case of the China-US conflicts. When the US decided to ban the sale of micro-chips to China, it also lobbied companies from other countries to do likewise, including those that supply micro-chip machineries and equipment to China. Without doubt, many Chinese and companies from other nations are greatly affected by the US’ move.  At the same time, the US also “threatened” many countries from having any business dealings and providing support to Russia in the ongoing war in Ukraine. In fact, some companies were blacklisted for dealings with Russia. From these episodes, there are several lessons to be learned.

First, in any boardroom decision-making and planning, the attention to the traditional risks analyses can no longer hold. Instead, the corporate boardroom strategists must carefully factor in geopolitical risks in all their plans. Second, geopolitical risks can come from any sources, and can be very unpredictable in terms of how they affect the operations of a company. Third, the impact from geopolitical risks is not confined to the companies directly affected by the conflict. As highlighted, the fallout from the China-US conflicts affects many countries and their business corporations. Fourth, there is clearly a need to upskill the domain expertise in risk management, to take into account geopolitical risk analyses, and to take on a more holistic and even long-term approach. Finally, the need to build corporate resilience is now a must, and contingency, scenario and survival planning are now must do exercises.  

In sum, it is important to recognize that geopolitics is now greatly impacting corporate boardroom decisions and strategy development. It is worth highlighting here that regulatory bodies like the Singapore Stock Exchange and the Securities Industry Council have important roles to play as well. They should extend their range of training courses beyond what they are currently doing by including training on various aspects of geopolitics.

2.  Set up a Geopolitical Division with a Chief Geopolitical Officer (CGO).

Clearly, the time has come for companies, especially those larger ones that have cross-border operations, to set up a Geopolitical Division (GD) with the appointment of a Chief Geopolitical Officer (CGO). In fact, the CGO should be very much part of the senior leadership team in the company and be present at all board meetings. For companies which cannot afford to set up a Geopolitical Division, the Chief Executive Officer (CEO) or even the Chief Human Resource Officer (CHRO) may have to double up as the CGO. The GD is to be overall responsible for managing the impact of geopolitics on the company’s business. Its roles, and that of the CGO can include, but not limited to the following:

  • To monitor geopolitical events that affect the company.
  • To work closely with functional heads and risk management colleagues.
  • To work with relevant government agencies.
  • To develop tools and capabilities for forecasting and monitoring geopolitical developments.
  • To conduct tests on how the company can withstand geopolitical disruptions.
  • To provide geopolitical briefings to the board and to recommend strategies accordingly.   
  • To liaise and work with any other external bodies on geopolitical matters.

3.  Board needs Domain Expertise on History, Geography and Political Science. 

Other than setting up a Geopolitical Division and appointing a Chief Geopolitical Officer, the corporate board, which is the highest decision-making body of a company, must be equipped with domain expertise on history, geography and political science – the areas that fuel geopolitical conflicts. In other words, having the typical domain expertise on business, accounting, finance, law and economics (which is the case of most companies today) are not sufficient. Given the very turbulent geopolitical environment of today, business decisions cannot be detached from lessons from history, geography and political science anymore. Of course, if there are board members who are trained and/or with experiences in such areas, it would be very beneficial. If such domain expertise is absent among board members, then it is important for the company to engage domain experts in geo-politics as consultants and/or advisors to the board. These experts will be tasked to provide regular briefings to the board and top management, to help to work through complex geopolitical issues, and to provide insightful perspectives and alternative solutions to the challenges faced by the company.   

Of course, if there is a GD and CGO, they can lend the needed support to the board in that much homework and research can be done for the board directors to make more considered decisions, and develop better strategies.  

4.  Board Members, the CEO and Top Management as Business Statesmen. 

The time has also come for board members, the CEO and top management to become business statesmen for the company. A very good example is that of the founder of Huawei, Ren Zhengfei (任正非). Prior to the saga surrounding the arrest of his daughter, Meng Wanzhou (孟晚舟) by the Canadian government and the blacklisting of Huawei by the US government, Ren Zhengfei was very much an introvert and a private person. Arising from the saga, the company was under very severe global scrutiny by critics, analysts, customers, and the public. In order to overcome all these challenges, Ren Zhengfei came out of his shadows and private life. He became the public relations spokesman of the company, met the media, faced the investors, and even took on the challenges of hiring R&D scientists for the company. In the crisis, as the founder and group CEO, Zhengfei was the best person to provide all the necessary assurances, to defend Huawei and to give first-hand account of what happened, and what would be needed for the company in the future.  

The Huawei saga is an excellent illustration that the need for proactive geopolitical strategies has arrived, and a company needs to be on 24/7 guard against potential geopolitical threats as they can come from anywhere and anytime. The link between geopolitics and business performance can no longer be ignored. More importantly, board members, the CEO and top management must now network and be involved with government agencies/bodies so as to tune in with latest political thinking and development of world affairs. They should participate actively in international conferences on geopolitics, attend regular briefings conducted by their own GDs, their geopolitical consultants and advisors, as well as by other external agencies.

5.  Astute Deployment of Key Manpower Overseas.

In deploying key management staff overseas, especially to countries that are highly affected by geopolitics, a company must now seriously consider sending staff who are savvy in geopolitics.  If necessary, the relevant training on various geopolitical matters must be provided. The topics of training can include politics, history, culture, geography, and even language. Staff who are sensitive to how politics can impact business operations are like the geopolitical antennae of the company, and serve to alert and sensitise the company to possible adverse developments. If resources permit, a company can also engage local experts of the respective countries to augment its domain expertise on geopolitics. While working at their respective countries, these geopolitically astute staff can also help to collect information that are beneficial to the company in developing more effective corporate strategies. The experiences accumulated by these staff would also become very useful platforms for learning by other staff of the company. 

6.  Siting of Regional Headquarter, Production and Other Key Facilities.

Traditionally, companies would site their regional headquarters, production and other key facilities in locations that are based on lowest cost, highest productivity and other performance indicators. However, these indicators are no longer sufficient in view of the new geopolitical environment.  For example, arising from the geopolitical tensions between China and the US, many Western companies, including multinational corporations (MNCs), are now actively pursuing a “China-plus-one strategy.” Many of them are looking for alternative sites in Asia and other countries to locate their production, logistics supply chain and other supporting services. Likewise, many Chinese companies are seeking to bypass the sanctions of the US and some European countries by working with partners in less sensitive countries. In other words, choosing sites in politically less-sensitive countries to locate key facilities are now a top priority.  

Of course, moving to politically less-sensitive countries do not necessarily guarantee success. Issues pertaining to costs, efficiency, productivity and networks will still have to be considered. In addition, it is also not so easy to pull out one’s company simply to please the action of one’s country against another. Take the case of China. Many US companies, despite coercion from their government, are still reluctant to pull out of China. The reason — the Chinese market is simply too huge to be ignored. Indeed, the Chinese market has become the largest overseas market for these companies, at times surpassing the markets in the US and Europe. Hence, forgoing a large chunk of revenue and profits is not an easy decision to make, and the loss may not be recoverable in the future. Likewise, despite the severe sanctions against Russia for waging war against Ukraine, many US and European companies are still not pulling out completely from Russia. There is another added concern of these companies, which is, when the geopolitical tensions cool down, they may not be allowed to return to the country that they have left. The return route will be even more difficult if the vacuum left behind by them were quickly filled out by local operators or some third- party operators from other nations.    

In pursuing the “China-plus-one strategy” or for that matter, a “Russia-plus-one strategy,” a company must also factor into account the challenges of re-location costs, and the added costs of possible future re-locations should things do not work out in the new location. Along with this, reputational damage is something that is difficult to estimate, and may have even more lasting negative impact on the company. 

7.  Building Resilience in Supply Chain Systems.

When trade and investments between China and the US were affected by geopolitical frictions, supply chain systems were greatly impacted. Companies suddenly found that they had to seek alternative sources of supplies in order to serve their customers. Even manufacturers were forced to look for alternative sources of materials in order to support their operations. These problems persist today as alternative supply chain systems are not easy to build, and even if they can be done, they may not be efficient and effective.  

What companies have learned through recent geopolitical events is that they must be able to build alternative supply chain systems, and to build them in double-quick time and at reasonable costs. They need to ensure that any new supply chain system must be as sustainable as possible to be able to withstand disruptions caused by geopolitical contests among countries. Relationship building with key players in the system has become necessary and compulsory. In addition, to cushion against supply disruption, the possibility of stockpiling of key supplies, materials, parts, etc. have to be actively pursued. This would include the amount and duration in which such stocks can be kept, and the costs of keeping them.   

8.  Overcoming Market Vulnerability/Volatility. 

In a highly uncertain geopolitical environment, markets can become very vulnerable and face great volatility. Take the case of Russia. When the US and several EU countries ban importing Russian oil because of the Ukrainian war, Russia was forced to find alternative buyers for its oil. In this instance, it did not take Russia too long to find alternative buyers in India, Iran and China. However, it had to sell its oil at discounted prices.

From the Russian experience, several lessons can be learned by companies. To begin with, a company must be able to respond to any threat posed by geopolitics. There is a need to diversify assets, markets and even customers. Relying heavily on one or two major markets can certainly cause a company to be highly vulnerable. In addition, it is always helpful if a company has a strong cash hoard and reserves in order to have the ability to withstand extreme shocks and turbulences caused by geopolitics. Having strong cash reserves also allow a company to capitalize on any opportunities that may arise during the crisis. Other than building strong cash reserves, a company must also line-up available credit lines and having adequate loan facilities. Finally, measures and protocols must also be in place to manage withdrawals from any affected markets.

9.  Managing Currency Risks.

When Russia invaded Ukraine on 24 February 2022, Russian rouble crashed more than 30% against the dollar as a result of unprecedented international sanctions led by the US. Indeed, the Russian rouble fluctuated severely when the war broke out. The Russian government had to take a series of emergency measures to prop up the rouble. At the same time, the failure of a key sanction against oil and gas exports also prevented the rouble from tumbling. From the Russian experience, it is clear that currency exchange rates can fluctuate significantly in times of geopolitical conflicts.  

Interestingly, there are ways to mitigate against the disadvantages caused by severe currency fluctuations. For example, on August 5th, 2019, China lowered the value of the RMB below its 7 to 1 peg against the US dollar in response to the imposition of U.S. tariffs on its $300 billion of exports to the US. As a nation, it can also choose to conduct trade in its own currency in order to ensure currency stability. At the corporate level, companies can also explore hedging and other risk-reduction tools for the currency that it is trading in.  

10. Diligent and Astute Management of Information.

In order to have a better grasp and understanding of the impact of geopolitical threats on the business operations of a company, it is important that it manages information diligently and astutely. Companies can no longer rely on the main stream media for information as they can have their own political agenda too. In fact, companies need to be more discerning in view of the non-stop news cycle and the over-abundance of current affairs coverage and commentaries (at times, bias and subjective). For example, there is a need to decipher, differentiate and handle false information, misinformation, information overload, and blockage of information. In addition, a company may have to develop its own corporate intelligence capabilities in order to deal with the massive onslaught of information that can be misleading in nature. The time to react may be limited and outcome hard to predict. At the same time, competitors may exploit opportunities from political shifts faster than you if you fail to master the issues.

11. Explore Risk Insurance to the Extent Possible. 

Insurance cannot solve all the problems, but can mitigate against some risks. However, premiums will be high. At the end of the day, nothing beats having solid intelligence, conducting detailed planning with in-depth analysis, and astute implementation.   


The world that we are operating in is very different today. Gone are the days where countries willingly plug into global          trade and investment, and cooperate generously for the betterment of mankind. Instead, increasing number of countries, and notably the US, have become more inward-looking and putting their national interests above anything else. It has become increasingly obvious that the US is making every attempt to restrict the growth of China and its global influence. At times, events have been escalated that heighten the geopolitical tensions between them. The incident of shooting down the Chinese balloon on 4 February 2023, on the excuse of security threat and possible spying activities is a good example. Tik-Tok, the very popular video-sharing app owned by Chinese company, ByteDance, is increasingly facing the threat of being banned in the US, again on excuses of potential espionage activities and security threat. As it is, all government officials in the US and some Western countries are already banned from using Didi.  Meanwhile, the tensions on Taiwan and South China Sea continue. 

Indeed, geopolitics have become the order of the day. As a result, companies, which are at the forefront of global trade and investment, end up paying the heaviest price in such an unstable and fast changing geopolitical environment. To sustain their operations, and to maintain their competitiveness, new ways of managing their companies have to be found, especially on how to circumvent and overcome the challenges posed by geopolitics. Hopefully, this article provides some useful suggestions.         

Wee Chow Hou is an Emeritus Professor at Nanyang Technological University (NTU) and an Adjunct Professor at the Singapore University of Social Sciences (SUSS).  He was a former Dean of the Business School at the National University of Singapore.  He has sat on many publicly listed companies and has consulted and/or conducted executive training for over 350 companies in over 30 countries over the years, including Fortune 500 companies.  Among various courses that he teaches at NTU and SUSS, he also conducts a course on Geopolitics and Business Policy to MBA students at NTU. 

April 2023