Multinationals have long benefited from globalizing their technology development and operations. Pooling data, standardizing software, and centralizing hardware and staff have enabled global companies to convert scale into a driver of efficiency and, ultimately, competitive advantage. But today, the fragmentation of technology along geopolitical fault lines, due largely to competition over the development of AI, is turning globalization into a liability—and a source of major strategic risk.

In the real world, this risk plays out in myriad ways among multinationals. In one specific market, a US-based consumer electronics manufacture had to revise its product and turn to a local AI provider to power it in order to avoid running afoul of potential software use restrictions. A European company with foreign ownership risks losing access to critical hardware for its products due to export restrictions tied to its ownership structure. An Asia-based machine tool manufacturer could not standardize the software embedded in its products because the software had to comply with different regulatory regimes.

In each of these stories, sudden regulatory action resulting from volatile geopolitical tensions disrupted a multinational’s strategy and operating model and affected its ability to cost-effectively deploy or adapt technology across geographies. If this sounds like a board-level problem, that’s because it is. Whereas previously, “IT resilience” was a matter of maximal uptime or business continuity, today it is existentially significant. As such, boards need to test and support their management teams’ efforts to plan for the increasing possibility that technology-driven geopolitical turbulence will upend their core business—not merely to ensure continuity but also to maintain access to growth markets and create strategic advantage.