How companies can play a stabilizing role in a volatile geopolitical environment

In recent years, geopolitics has become increasingly relevant in shaping commercial outcomes. National security-driven trade policies and geopolitical volatility are bigger drivers of inflation and supply disruption than classic economic cycles. In addition, the world is increasingly regional and local, with the days of Bretton Woods-style agreements far behind us.

These dynamics, amid rising uncertainty, create increased complexity and higher costs for the private sector. Corporations must contend with legal, operational and commercial requirements – from sanctions compliance to higher logistical costs and boycotts.

Some dynamics favour larger players, who typically have more established compliance teams and an ability to leverage economies of scale. Others favour smaller companies that are more agile and less politically exposed. No sector is immune but how these dynamics manifest is specific to the industry, company type and operational space.

Companies have a constructive role to play during geopolitical swings as both impacted parties and actors that shape them. When constructively applied as inputs to foreign policy, companies can support global security by:

Companies need this geopolitical muscle, developed in response to operational realities, as they operate across geopolitical fault lines and manage complex supply chains.

In turn, this provides deep insights into market dynamics and trade flows, which help limit the impact of volatility and insecurity driven by both conflict and great power dynamics.

Companies need to be intentional about joining the conversation and governments must consciously bring them in.

Companies that develop strategic partnerships with entities in stable jurisdictions of countries that strike a balance between global competitors can help build resilience against great power dynamics and broader geopolitical tensions.

For instance, a smelter of critical minerals co-owned by a Singaporean sovereign wealth fund, a shipyard in a neutral hub or a container terminal operated in a joint venture with a Gulf Cooperation Council-based state-owned enterprise will face greater protection against geopolitical swings.

These arrangements can reduce exposure to sudden shifts in market access or political pressure, provided they are structured in full compliance with applicable laws and sanctions.

Companies can also make bilateral relations more durable by becoming a feature of dealmaking (through purchase commitments) and serving as a watchdog on progress.

“Blue jeans diplomacy” exemplifies how consumer goods forge people-to-people ties that outlast politics. In the Cold War, Western jeans, despite restrictions, became symbols of openness in Eastern Europe, showing how everyday commerce can serve as informal diplomacy.

With compliance and community benefits, they raise the political cost of disruption. Today, industry-specific tariff carve-outs show how governments compartmentalize sensitive sectors to keep trade talks moving.

In the 2025 US-Japan trade framework, the auto industry won exceptions to preserve an integrated manufacturing system. Such unified positions can secure carve-outs, offsets or phased timing that maintain continuity through policy shifts.

These are not loopholes but pressure valves, buying time to adapt supply chains and sustain diplomatic momentum, in exchange for credible, monitorable industry behaviour.

Companies can also demonstrate to governments their shared concerns, warranting greater collaboration across fault lines. They can contribute, for instance, to framing a shared understanding of the problem in areas such as sea piracy or insecurity in maritime chokepoints.

Neutral platforms, such as the World Economic Forum’s network of councils, can facilitate this dialogue and help align perspectives by engaging government, the private sector, think tanks and other stakeholders.

Business leaders can play a key role in helping buffer against volatility by building coalitions vertically along their supply chain and horizontally with competitors to design a mechanism for common resilience.

In these times of instability, access to shipping and logistical hubs will become an increasingly strategic advantage. A closer coordination with suppliers will be needed to move supply chains closer to end markets, reflecting their fractionalization, as companies build up strategic stocks and increase logistical flexibility to ensure multiple rather than single sourcing.

Similarly, coordination among companies in the same industry becomes increasingly relevant amidst external disruptions. For example, global shipping lines have implemented intelligence-sharing mechanisms and aligned rerouting policies to mitigate threats and contain the competitive disadvantage resulting from cost asymmetries.

Business leaders will also need to think increasingly in terms of an industry-wide approach when dealing with governments on policies aimed at mitigating the impact of geopolitical volatility, such as the accumulation of strategic stocks or addressing the unintended consequences of trade restrictions or sanctions.

Effective communication with governments is becoming a competitive advantage; business leaders need to frame issues in terms actionable by policymakers. The private sector has done this well by translating corporate experiences into the policy and prioritization process.

Governments will always need to approach their foreign policy agenda through a lens of creating maximum value for their constituents and national agenda. However, foreign policy implementation can be nuanced and tailored to avoid unintended commercial implications.

Companies can take steps to more effectively play this mediating or buffering role by developing better internal skills in the context of higher geopolitical volatility, specifically, by becoming more adept at assessing geopolitical risks, monitoring their developments and evaluating their impact.

Business leaders who have developed geopolitical and supply chain intelligence can play a more active role in shaping geopolitical dynamics, increasing the likelihood that their company can benefit from direct navigation of these dynamics, as well as from a more stable system.

Taking an assertive stance and developing geopolitical muscle requires business leaders to nurture a new skillset across their organization and sharpen their assessment framework to spot and implement these stabilizing mechanisms.

It also requires businesses to internalize the potential impact of global or regional geopolitical dynamics on their operations and strategy: senior executives as well as top management need to hone their sense for geopolitical assessment.

By embedding these skills into the organization’s DNA, companies can empower more nuanced risk analysis and mitigation.

That’s only half of the equation – governments also need to listen and internalize the commercial implications of foreign policy decisions.

Multi-stakeholder platforms, including the Forum’s Global Future Council on Geopolitics and multi-stakeholder convenings e.g. the United Nations General Assembly meeting, present critical opportunities to incubate new ideas and deepen partnerships.

They advance government imperatives, proactively integrating company feedback into foreign policy decision-making and encourage companies to share their expertise and perspective with governments.