1 Geopolitical factors now create risks and business opportunities that are too significant to ignore. An automotive company disclosed that tariffs would cut around $4 billion in its bottom line, despite plans to mitigate around 35% of impact. An energy company reported that a major renewable project close to completion was halted in one of its main markets, forcing executives to choose between litigation and diplomacy. They chose the latter, eventually securing authorization to restart. Strong geopolitical radar and sonar7 are essential to detect signals, interpret the geopolitical landscape and anticipate the financial consequences. Yet the interviews revealed that only a small minority of firms attempt to quantify their exposure. Most rely on qualitative narratives and scenarios, heat maps or descriptive reports. Quantification is not an end in itself, but it matters. For geopolitics to influence decisions, it must be expressed in business terms to enable executives to compare and prioritize options and the trade-offs between geopolitical exposure and other strategic considerations. Real value lies not just in spotting signals but in translating them into decisions and doing so quickly and systematically. For the automotive company, this meant reclassifying trade flows, employing specific trade conventions and redesigning parts of the supply chain. For the energy company, it required government engagement and diplomatic outreach at multiple levels to unblock approvals. Companies that build the capability to translate geopolitical signals into concrete business actions are far better equipped to make strategic decisions based on analysis rather than chance. In a few firms, this capability develops organically, but more often it requires deliberate and sustained investment. For most organizations, the first response has been to treat geopolitics as a risk-management problem. As one senior executive from a global investor reflected, “Our legacy approach was reactive, built to defend, not to anticipate.” Yet, geopolitical risk management is the first step towards organizational maturity, providing a foundation for more structured resilience. Effective risk management forces leadership to turn broad uncertainty into achievable mitigation measures: diversifying suppliers, adjusting production footprints and identifying partners or markets that require contingency planning. As one insurance executive explained, “Resilience costs money; you need to arbitrate the trade-off between profit and resilience.” In capital-intensive industries, this trade-off is particularly acute. An industrial company described its challenge succinctly when discussing its manufacturing footprint in geopolitically exposed regions: “Exit too early and we lose; exit too late and we lose.” Managing that balance between cost effectiveness and strategic flexibility has become a defining test of effective geopolitical risk management for global firms. Yet geopolitics is not only a source of risk, it also creates opportunities for companies able to navigate it effectively. This is more challenging in industries that have made the most of global scale and have limited scope to localize their operations. However, some geopolitical shocks enable firms to differentiate and capture advantage. For example, EU sanctions imposed on Belarussian potash in 1.1 From signals to strategy 1.2 From risk management to competitive advantageThe case for geopolitical muscle Competitive advantage in today’s fractured world depends on rapidly and systematically transforming geopolitical awareness into strategy, investment and operations guidance. Building Geopolitical Muscle: How Companies Turn Insights into Strategic Advantage 8

Building Geopolitical Muscle 2026