Geopolitical risk on the rise

The share of executives that perceive geopolitical instability as a major trend affecting their business has doubled within the last two years and have direct negative implication for corporate performance. Geopolitical concerns have increased more than any other trend in a two year time period, says McKinsey that started surveying executives more than a decade ago. It is now perceived as important as technologies empowering consumers and communities and the growth of consumers in emerging economies. 

Most respondents thereby expect negative effects on their profits due to geopolitical, political and macroeconomic instability. 84 percent of executives cite geopolitical risks as important or very important trends for their business. The share of executives perceiving it as very important has doubled has doubled to 23 percent.

Many executives expect a disruption of the global economy due to higher vitality within the next five years. Besides global instability, domestic instability is seen as an important trend by two third of survey participants too. Overall, domestic political instability as well as slowing growth in developed economies is seen as the biggest risk for profits in the next five years.