How entrepreneurs can manage geopolitical risks to enable growth

By implementing a risk-informed approach and strategic framework, businesses can thrive in a world of disruption.

In brief

• Geopolitical risks have increased, and businesses have to adapt.
• Every business needs a geopolitical strategy to manage policy changes and expansion plans.
• With the right approach, entrepreneurs can prepare for the volatile geopolitical landscape.

Entrepreneurs looking to grow their business discussed implications of geopolitical developments during the 2024 Strategic Growth Forum. The ever-changing landscape requires a dynamic and adaptable strategy to manage regulatory changes and policy shifts globally.

A snapshot one year ago showed that 98% of CEOs surveyed were developing plans to adapt their strategies to political risks. They were relocating assets, delaying investments and exiting businesses. More recently, in the January 2025 EY CEO Outlook Pulse, CEOs surveyed globally said they expect geopolitical disruption and the shifting economic environment to be among the top disruptive forces over the next 12 months. 

Knowing where to go and how to seize new opportunities can be equally challenging for entrepreneurs and CEOs.

One business owner we spoke with at the Strategic Growth Forum® US said that while his company decided to sell an overseas factory years ago to get ahead of geopolitical risk, it has now realized that opening a domestic manufacturing operation in the US would present a range of additional tax and regulatory risks depending on the state. “We evaluated everywhere, and it’s hard now to find a place where we’re comfortable going,” he said. “We’d like to invest.”

Developing a geopolitical strategy

The bottom line: Nowhere is risk-free. But political risks can be effectively managed. A long-term, political risk-informed approach will help entrepreneurs and executives anticipate changes and adapt their strategy proactively. 

To navigate this complex landscape, it’s crucial to stay abreast of global news and trends and the local perspectives that may impact your sector. Embrace these uncertainties by asking “what if?” often. 

How could global economic challenges, trade disputes and political instability affect market conditions that can significantly impact your business operations? Should you diversify your market presence to mitigate the impact of geopolitical risks in any one area? If “X” scenario happened, who would need to be informed? Who would need to take action? The answers to these questions can be used to develop contingency plans and mitigating actions to take now in case the risk manifests in the future.

Steps to navigating volatility

Entrepreneurs can also consider these four actions to prepare a geopolitical strategy that will allow them to grow and thrive even amid uncertainty and volatility.

1. Establish a cross-functional team and a centralized governance structure.

In the September 2024 EY CEO Confidence Index, only 30% of CEOs reported that they have full visibility into their company’s exposure to political risk, but the CEOs who reported feeling the most confident in their decision-making and ability to adapt to change apply a political risk lens 85% of the time.

Involving the entire organization can help to develop a comprehensive view of geopolitical risk, as well as a high degree of trust. Encouraging the free flow of information throughout the organization integrates risk planning into decision-making, taking geopolitical strategy from a macro level to one that’s relevant to every business team.

2. Continuously scan the horizon to identify internal and external risks.

Political risks can emerge from election outcomes, shifts in foreign policy, tariffs, regional trade agreements, national security concerns, military conflicts and many other actions.

Four main types of risk to examine are geopolitics, country-level risks, regulatory risk and societal risk, such as consumer boycotts or labor activism. These are often intertwined. By continuously monitoring potential risks that reflect a changing world, organizations can develop strategies that are more resilient to shocks.

3. Assess risk impacts quantitatively across the business.

Assessing the impact of risk looks different for every company, and it’s an area where business leaders often express the least confidence in their abilities. Business owners should develop a broad set of risk indicators along with qualitative and quantitative metrics from inside and outside the organization. Once those are identified, artificial intelligence tools can make it easy to gather dynamic inputs from multiple sources and assess the data.

You then can map the potential impact and response gap across the different business functions to determine where to improve response, evaluate further or reallocate resources. Focusing on these impacts can also lead entrepreneurs to discover new opportunities. 

4. Practice with tabletop exercises to workshop strategies.

Invite the risk team and executive team to “game it out” virtually or physically with exercises that encourage new ideas and help entrepreneurs get a handle on how the risks could impact them.

The scenario doesn’t have to be a perfect storm to bring fruitful outcomes. Instead, it’s about building trust, communication and muscle memory, which teams rely on in times of change.

Equip your team with the skills and knowledge to identify and manage geopolitical risks. Regular training sessions and workshops can enhance their ability to respond effectively to emerging threats.