From Blind Spots to Insights 2025

Executive summary The ways in which companies with extensive cross- border operations are reacting to the intensification of rivalry between governments in a multipolar world is of growing importance. Ultimately, the reaction of international businesses will be shaped profoundly by how corporate executives track and assess geopolitical dynamics – their so-called geopolitical radar. Based on in-depth interviews with 25 multinational companies, this white paper explores the extent to which international businesses are developing and deploying their geopolitical radar. Geopolitical radar serves a variety of purposes, each reflecting a task undertaken within firms. International businesses have developed near-term tracking mechanisms, typically identifying relevant geopolitical factors based on prior experience. Detailed exposure assessments of geopolitical developments are now standard and such tracking is complemented by periodic scenario planning and consultation with external experts. However, international businesses differ in their approaches towards selecting which internal unit is entrusted with managing and acting on the insights gained through this geopolitical radar. Corporate geopolitical radar tends to give greater prominence to state actions that are mandatory, require immediate action and are clearly impactful (for example, compliance with a regulatory requirement). When any of these three conditions are not met, the attention given to a geopolitical factor tends to diminish. This deficiency reflects the essentially backward-looking and reactive identification of relevant geopolitical factors. Developing geopolitical radar is not in and of itself sufficient. Geopolitical sonar is also needed to provide additional context on the drivers underlying geopolitical events. There is no denying that costs are incurred in developing an effective geopolitical radar and sonar. Rather than seeing this as a deadweight cost, this report identifies six commercial payoffs resulting from better navigation of geopolitical currents. Shifting from an experience-driven, backward- looking identification of geopolitical risks to a forward-looking tracking of geopolitical dynamics will transform decision-making from reactive to proactive. The ability to read geopolitical events at an early stage can generate mitigating measures and business opportunities – but this requires a deeper appreciation of the drivers of geopolitical dynamics. Ensuring that a company’s internal geopolitical function sets aside legacy attitudes, supports institutional memory, reduces key person risk and shares information where and when needed can all contribute to efforts by international businesses to better capitalize on the opportunities that arise as globalization continues to evolve in a multipolar world.By shifting from a backward-looking, event- focused understanding of geopolitical risks to a forward tracking of relevant dynamics, companies will be better placed to respond to challenges and seize opportunities. From Blind Spots to Insights: Enhancing Geopolitical Radar to Guide Global Business 4