In times of uncertainty, such as the present, most business leaders understand the need for caution, balance, and restraint, especially financial restraint.

If they are being honest with themselves, however, leaders know they should be careful with finances all of the time, because financial discipline isn’t a stop-and-go practice; it’s a practice for all seasons. It should be habitual, immutable, and deeply embedded in every organization’s culture and DNA.

As Philip Carlsson-Szelak and Paul Swartz, co-authors of “Shocks, Crises, and False Alarms” (2024, Harvard Business Review Press), wrote in March: “Today, new risks—specifically, new uncertainties—are rising, clouding the outlook and undermining confidence in continued growth built on a healthy U.S. consumer and strong economic momentum. Yet these risks cannot be assessed by translating uncertainty into the certainty of negative outcomes. Risks are up, but we should not rush to recessionary conclusions.”

It is natural, of course, to pull back—or at least prepare to pull back—when the known unknowns (Are we headed for recession? Does negative consumer sentiment mean reduced demand for our product? Will there be a prolonged global trade war? How much of our additional costs can we pass on to customers?) begin to overshadow the known knowns (their business’s cash position, current sales, and reliable long-term contracts, for example). Add some unknown unknown into the mix (such as the probability of a natural disaster, political turmoil, or supply-chain disruption) and alarm bells may ring in executive suites.

In such circumstances, if the boss calls for austerity and belt-tightening, managers and employees are inclined to cooperate. They shouldn’t have to account for every paperclip, of course, but they may have to justify travel, staff additions, and other major expenditures, both budgeted and unbudgeted—and identify potential cost-savings.

That’s where many, if not most, U.S. and global businesses find themselves today.