During the past few years, company strategies have been disrupted repeatedly by major shocks like the COVID-19 pandemic, the outbreak of war in Ukraine and the Middle East, and breakthroughs in generative AI. In the first months of 2025, a stream of political surprises has been impacting company agendas — and further upheavals seem likely.

This turbulence is having a real impact on business: Our analysis of nearly 7,000 organizations over a 20-year time frame shows that variance in company profitability can increasingly be attributed to factors that lie beyond the company and its industry. Contextual factors — like geopolitics, technology, and climate — now account for 43% of the variation in the net profit margins of public corporations.

Increasingly, politics is the generator of surprises that reverberate in boardrooms around the world. After the Second World War, countries in most of the Western world embraced economic growth as a primary goal, which went hand in hand with national governments’ support for business activities. Today, with increasing social and political division within many countries and rising geopolitical tensions between them, this support can no longer be taken for granted.

How, then, can CEOs and their teams navigate the current era of political disruption? They must understand and strategize for political risk. Let’s explore how.