From shocks to strength: how resilience drives value creation

The global economy has experienced a succession of disruptions in recent years: a pandemic, supply chain pressures, regional conflicts, sticky inflation, shifts in monetary and trade policies, climate impacts and the rapid acceleration of AI. These developments are creating a more complex, uncertain and interconnected risk environment.

For long-term institutional investors, resilience can no longer be viewed only as a protective layer. It is essential to sustainable value creation. Resilience can be built systematically, measured over time and reinforced across cycles. It strengthens financial performance and enables investors to preserve value, while taking advantage of opportunities created by greater uncertainty.

A resilient investment institution stays agile and not only survives under pressure, but thrives. Strategic clarity, sound governance, disciplined decision-making, high-performing teams, robust risk management and transparent communication strengthen an investor’s ability to capture opportunities, while staying aligned with long-term objectives and risk appetite through market cycles.

At Mubadala, resilience is embedded in how we define and manage our strategy, our portfolio and our institution.

Resilience begins with strategic clarity and pre-defined risk tolerance. Investment teams must stay aligned with long-term objectives while being able to capture opportunities in near-term volatile environments. This requires testing an investor’s convictions about the themes and trends driving the global economy against scenarios, including the implications of a fragmenting world, faster technological disruptions, shifting demographics, elevated debt level and increased climate volatility. These structural shifts are redefining value creation, risk exposure and the distribution of potential outcomes.

A resilient strategy focuses on fundamentals and long-term transformative shifts in the world that remain valid even as conditions change. It is centred around robust portfolio construction that translates the structural forces into forward-looking scenarios, and frameworks for allocating capital which maintain options for an investor while avoiding reactive swings. Critical enablers to the strategy – such as the balance between diversification and concentrating capital in promising sectors or geographies, explicit risk budgets, rigorous liquidity management and investment pacing through the cycle – allow the investor to remain both adaptive and anchored, able to evolve with the world, yet aligned with long-term objectives and risk tolerance.

A resilient portfolio is designed to absorb and recover from shocks, protect liquidity and capture opportunity amid persistent uncertainty. Management of the portfolio requires well-established capabilities, including market insights, to dynamically adjust when market conditions change, improving resilience and post-shock recovery.

Crucially, an outperforming portfolio embraces resilience as a source of return. Partnering with top-tier managers and investing in high-quality companies helps not only mitigate the impact of shocks, but also enables institutions to come out of crisis in a stronger competitive position. Without a resilient, risk-managed portfolio, an investor will not be able to act as effectively when markets are dislocated and will not deliver optimal long-term value.

A resilient institution is the foundation upon which strategy and portfolio decisions can succeed. It emanates from a culture of disciplined governance and effective risk management, a strong reliance on analytical and unbiased judgement, and transparent accountability. This protects operational capabilities and enables agile governance. Resilient institutions invest ahead in human capital, technology and data to strengthen fast and well-informed decision-making. They embed sound risk frameworks, and strong partnership models to ensure the institution can withstand crises, quickly learn and adapt, and emerge stronger. In a world defined by complexity and rising risks, institutional resilience becomes a durable competitive advantage.

Nations today are rethinking economic resilience in order to adapt, compete and thrive. Governments are seeking to strengthen the foundations of their economies. The importance of resilience becomes clearer when considering specific systems.

Diversified and reliable supply of energy and resources underpins national competitiveness and reduced vulnerability to external shocks. Early investments in critical infrastructure ensure access and stability in periods of volatility. Today, electrification, industrial modernization and rapidly growing digital demand are reshaping global energy systems. Modern grids, storage, renewables and low-carbon solutions all contribute to a more resilient and secure future.

Technological sovereignty, digitization and AI are creating unprecedented demand for data, computing power and connectivity, while also amplifying cyber, privacy and operational risks. Data centres, advanced networks, cloud platforms, semiconductor ecosystems, software applications and AI-native enterprises are essential for modern national resilience. Economies investing in these systems are better positioned to capture the productivity gains of AI and digital transformation in a secure and responsible way.

Supply chains are adjusting to a more regionalized global economy. Industrial and logistical centres are becoming necessary assets that support nations to enable industrial development.

Healthcare and life sciences are essential pillars of societal resilience and biosecurity. Strong health systems and innovation in diagnostics, therapeutics and advanced manufacturing help countries maintain stability and productivity.

Financial systems are being reshaped as debt burdens remain high. New digital assets and decentralized finance are expanding the ways value is created and transferred. AI is enhancing the speed and precision of financial decision-making, supporting more resilient and adaptive markets when combined with strong risk controls.

Mubadala has been investing for decades in such sectors, which are the backbone of future growth: either directly, as a shareholder in companies led by strong management teams that we support to compete and scale; or indirectly through top-quartile fund managers.

Long-term institutional capital plays a critical enabling role: It brings patience, scale and stability that align with the multi-decade horizons needed to modernize industries, accelerate the climate transition and adaptation, deepen innovation, and strengthen businesses. By partnering with enterprises, stakeholders and communities, long-term capital catalyzes capital formation, supports private-sector participation and enables companies to scale, innovate, grow and compete. It becomes a vital force helping nations build resilient, more dynamic, competitive and future-ready economies.

The decade ahead is likely to be even more volatile than the last one, shaped by geopolitical shifts, technological disruption and accelerating climate pressures. Resilience will be a driver of long-term performance, enabling companies and economies to adapt quickly and capture opportunities.

For long-term investors, resilience strengthens the foundations of growth, supports innovation and ensures capital can be deployed with confidence. It is becoming a defining competitive advantage – and an essential pathway to delivering durable value for future generations.