Geopolitical Risk Needs to Move Away from the ‘After-Dinner Speaker’

The notion that geopolitics is a distant concern has finally been laid to rest by a growing number of CEOs. Dominic Barton, strategic counselor to Eurasia Group and chair of Rio Tinto, has driven home this message with his unique perspective on the evolving role of corporate leaders in navigating global uncertainty.

Barton’s experience as a veteran McKinsey leader turned Canadian diplomat turned Rio Tinto chairman gives him a distinct understanding of how corporate leaders must adapt to an increasingly interconnected world. The surprise tariffs, wars involving Iran, and new American tech bans have forced CEOs to confront the reality that their business operations are intertwined with geopolitics.

The assumption that international institutions, free trade, and a rules-based order would prevail has given way to a more precarious landscape. Diplomats now often use social media to bring issues forward, rather than traditional channels. This shift has left many CEOs struggling to keep pace with the changing global environment.

Barton’s assertion that “there’s a lot more risk, but there’s also a lot more upside” is an astute observation of the new geopolitical landscape. Companies must quickly adapt to respond to shifting economic and regulatory realities. Whining about the return to a bygone era will only leave them behind.

CEOs must treat geopolitics as a core part of their business strategy, rather than relegating it to the periphery. This requires building relationships with governments and engaging in meaningful dialogue with foreign officials. Leaders like Temasek’s Dilhan Pillay Sandrasegara, Apple’s Tim Cook, and Tesla’s Elon Musk have taken this approach.

Integrating geopolitics into corporate operations is not a simple task. Companies must consider the implications of their supply chains, data management, and incorporation strategies in a world where government regulations are becoming increasingly complex. The balance sheet must be reassessed to account for these new risks, and CEOs must develop contingency plans to mitigate potential disruptions.

Rio Tinto’s experience under Barton’s leadership offers insight into this shift. As China rises as a technological powerhouse, companies like Rio Tinto are adapting their supply chains and procurement strategies to access better-quality products that meet the evolving needs of global businesses.

The rise of geopolitics as a core concern for CEOs raises questions about the future of international trade agreements and institutions. Can companies balance their need for access to Chinese markets with the risks associated with relying on those same markets? The answers will not come easily, but one thing is clear: CEOs must engage with geopolitics head-on if they hope to survive and thrive in this new era.

As Barton said, “You can’t just do it anywhere anymore.” This sentiment reflects a growing recognition that corporate leaders cannot afford to ignore the complexities of global uncertainty. By embracing geopolitics as a core part of their business strategy, CEOs can position themselves for success in an increasingly interconnected world.