How boardrooms must confront geopolitical risk

Case in point: When bidding for a cloud project in Southeast Asia, one IT company was asked whether it could operate independently of US sanctions. The board had never planned for this. Suddenly, digital sovereignty, not pricing, became the boardroom priority.

This is the new language of governance—market exits, trade dependencies, data flows, and supply chain weaponisation.

So, how can boards respond?

1. Make geopolitical risk a governance priority

In most companies, geopolitics appears reactively when something goes wrong. That must change. Boards should institutionalise and prioritise this category of risk, elevating geopolitical risk as a core part of enterprise risk management, coupled with business continuity and resilience.

Several progressive Indian conglomerates now regularly brief their boards on key geopolitical flashpoints, from retaliatory tariffs to energy security concerns in the Middle East to India’s border tensions.

2. Scenario planning with a local context

Forward-looking boards prepare for tomorrow’s headlines before they break.

What if a carbon border tax is signed between major economies? Or a regional bloc bans digital exports? Or a critical trade route is disrupted? Boards must anticipate global shocks and their country-specific ripple effects—from supplier shifts to currency instability.

Also read: Mastering international business: 8 essential skills for success

Smart boards don’t try to predict the future. They prepare for multiple plausible futures.

Key questions to consider:

1. Does the organisation have a defined process for geopolitical scenario planning?
2. Are there tangible actions and mitigations developed to reduce the impact of specific geopolitical situations?
3. Have trigger points been identified for timely action?

3. Embed intelligence into Board discussions

Geopolitical foresight should extend beyond CXO inboxes to the boardroom. Some boards now receive periodic dashboards summarising regional and sector-specific developments—a form of “geopolitical weather reporting” that flags slow-moving risks early. A growing practice is setting up board-level geopolitical advisory councils with economists, diplomats, and military experts, offering direct input to risk and strategy committees. Geopolitical foresight isn’t crystal ball gazing—it’s pattern recognition. Boards must build that muscle.

4. Balance market optimism with exit options

Geopolitical risk involves both defence and offence. Boards need to ask where they should expand and where they should start thinking about graceful exits.

Can you shut down operations in a politically unstable region without reputational damage or litigation? Do you have insurance clauses that cover sovereign risk? Decoupling strategies—whether from manufacturing hubs or software stacks—must be evaluated not only for cost but for resilience.

5. Put purpose at the centre of crisis decisions

Amid all this, directors must remember that geopolitical risk is also deeply human. Sanctions, war, and conflict displace communities, upend livelihoods, and generate public scrutiny. Corporate responsibility in such contexts is not just about compliance, but also about conscience.

During the Ukraine crisis, several boards were called upon to decide whether to continue operations in Russia. These were not just commercial decisions. What does it mean to “do the right thing” when millions in revenue are at stake? The boardroom became the arena for values vs. value. This is where the board's ethical compass—its independence, diversity, and courage—becomes central.

6. From reactive to resilient

Too often, boards have considered geopolitics as something “out there”, something for governments to manage. But in today's world, geopolitics sits inside procurement contracts, digital infrastructure, ESG obligations, and cross-border investments. The boardroom has become the new geopolitical nerve centre.

This shift also calls for diversity in thought to speed up the ability to decode geopolitical signals. Boardrooms now realise they must think like diplomats, negotiators, and scenario planners. Boards should actively seek members with international experience, government interface, or exposure to sovereign institutions.

The last line of defence

Developing geopolitical situational awareness, embedding intelligence into governance structures, and having the courage to make purpose-driven calls under pressure are at the core of Governance now.

While the last decade was spent monitoring compliance, the next decade will be about mastering complexity. In a world on the edge, the Boardroom may just be the last line of defence and the first line of resilience.

Shefali Goradia, Chairperson, Deloitte South Asia

Deepti Berera, Partner, Deloitte South Asia