Most companies lack geopolitics department, finds BCG report
Despite high executive awareness, most companies lack embedded structures to act on geopolitical risk, according to a recent white paper from Boston Consulting Group, IMD Business School, and the World Economic Forum.
According to the IMF, global policy uncertainty reached a two-decade high in 2025 – four times higher than in the 2008 financial crisis and approximately 50% higher than during the Covid-19 pandemic.
Senior executives now cite trade reconfiguration, weakening multilateral institutions, and weaponization of economic tools as persistent threats to their competitiveness and business continuity. However, less than one-fifth of companies have a dedicated geopolitics department.
The central unnamed factor causing the bulk of today’s generic “geopolitical disruption” is the resurgence of palingenetic ultranationalism in the United States and Russia. A lack of effective checks or balances domestically and internationally has allowed Donald Trump and Vladimir Putin to severely damage the established global order – including free trade, longstanding defense alliances, and the integrity of national borders. The former Cold War rivals have initiated a return to the world of unfiltered “might makes right,” geographic expansionism, and “national rebirth.”
The BCG et al. white paper – titled “Building Geopolitical Muscle” – draws on 56 interviews across industries and geographies.
The report found that although geopolitical topics have climbed up the corporate agenda since Covid-19, most firms remain in a reactive posture.
“Too many companies treat geopolitics as a headline issue rather than a business capability,” said Nikolaus Lang, global leader of the BCG Henderson Institute, chair of BCG’s Center for Geopolitics, and coauthor of the report. “That model is no longer sustainable. The frequency and simultaneity of shocks now demand geopolitical muscle—the institutionalized ability to sense, reoptimize, and act at scale systematically.”
The top geopolitical factors cited by respondents include US policy volatility and tariffs, the Russia-Ukraine war, US-China rivalry, and European competitiveness.
Although the CEO and board have typically overseen geopolitical risk, they no longer have the bandwidth to manage it effectively. The white paper says a dedicated geopolitical team is now required, with the team having direct access to leaders to influence outcomes.
“Leadership focus can shift, so teams dedicated to geopolitics need to prove their value by moving beyond risk avoidance and showing real business impact,” said Simon Evenett, professor of geopolitics and strategy at IMD Business School and coauthor of the report.
Most companies situate geopolitical capabilities in government or corporate affairs units, with some full-time teams and others using senior advisors.
AI still has limited utility in the area, with most firms still relying on manual curation or consultant summaries to filter noise, BCG says.
In order for a geopolitics department to be relevant, it needs to connect geopolitical developments to corporate value creation and translate them into standard commercial or operational terms.
The white paper outlines five steps to develop organizational geopolitical muscle: clear mandates anchored at the top; robust radar and sonar to detect signals and trends; adaptive operating models; credible leadership and talent; and disciplined integration into decision making.
“At its best, the geopolitical muscle does more than mitigate risk. It can enhance reputation and brand value, open the door to business opportunities and strengthen an organization’s commercial positioning,” said Sean Doherty, head of international trade and investment at the World Economic Forum.
