Building Geopolitical Muscle 2026

What next? Building geopolitical muscle is an ongoing journey: organizations evolve and refine their models as experience and exposure grow.3 Beyond developing geopolitical muscle through the five building blocks explored in this paper, executives are invited to consider additional factors. Historical precedent suggests that current geopolitical tensions will persist for an extended period. Companies should prepare for an environment where cross-border commercial ties, technologies and resources become instruments of statecraft, while cyberattacks and other forms of hybrid warfare remain probable scenarios. These factors indicate that companies will require sustained geopolitical capabilities for years to come. There are several considerations to guide executive leadership in the coming years regardless of geopolitical muscle starting point: 1 Demonstrating value creation to justify investment Emphasizing risk avoidance alone might not provide a sufficient foundation for sustained investment in geopolitical capabilities because of two main challenges: –An attribution problem: Even when companies avoid adverse outcomes, geopolitical functions may not receive appropriate credit, as decision- making is inherently collective –False negatives: These occur when geopolitical assessments recommend foregoing commercial opportunities that other executives favoured, but the anticipated adverse outcome did not materialize. In such a case, executives who were “in favour” might characterize geopolitical guidance as unwarranted constraint on value creation However, when apparent, external validation on effective risk management helps make the business case for properly resourcing a geopolitical function – for instance, financial markets may reward firms that demonstrate superior management of geopolitical risk through lower capital costs. But the case for investment becomes more compelling when geopolitical capabilities identify opportunities for strategic advantage or innovation. Proactive firms can, for example: –Anticipate evolving buyer preferences and regulatory landscapes –Accelerate the development of products and services with compelling security-related value propositions –Generate insights that enhance engagement with governments, as states today show greater willingness to exclude certain firms and deploy resources through security-related industrial policies Indicators and metrics of value creation are not straightforward to determine and monitor without creating unnecessary layers of reporting, but there is value in factoring in this consideration early in the process of developing geopolitical capabilities. Building Geopolitical Muscle: How Companies Turn Insights into Strategic Advantage 24