The earth is tiny. Globalization and technology have reduced their size. Thomas L. Friedman, columnist of The New York Times and winner of three Pulitzer awards, has said it differently: «The world is flat.» In fact, it has become more flat since the Cold War, when a wave of capitalism spread to every corner. The barriers surrendered to an economic model where the lowering of costs, efficiency, greater production and the invisible hand of the market carried the baton. Business giants led by CEOs who had the planet in the palm of the hand were created. «They had the privilege of not worrying about international politics, but only for reasons such as market size, population growth or purchasing power of each country,» argues Andrea Colli, professor of business history at Bocconi University of Milan. The story, however, took an unexpected turn. Russia, who seemed to be headed for democracy and free market, moved away from the road, and China did the same. The supposed end of history, as the writer Francis Fukuyama said, in which liberal democracy would be imposed globally, turned out to be an illusion. China’s overall influence ascended to be one of the great geopolitical (western) concerns, to which numerous fronts have been added in recent years: from the Russian invasion in Ukraine and the tensions it has generated among NATO members, to the tariff war of the Donald Trump government and the Israel conflict in Gaza, where a genocide is being perpetrated. All of them have stirred the International Lobby and had an effect on the big corporations. The European Survey of Financial Directors of Spring 2025 of Deloitte shows that geopolitics is among the three main risks for 90% of its 1,542 participants. This alert level is the highest registered since the consultant began performing this survey in 2015, and even exceeds the levels observed at the beginning of the Russian occupation of Ukrainian soil at the beginning of 2022.
Jaque to globalization
For European financial directors, the current dynamics translate directly into possible interruptions of income flows, increases in operational costs and limitations in strategic flexibility, specify the experts of Deloitte. «Geopolitics is no longer considered a distant externality. It is now fundamental to the immediate operational and financial health of the business,» they add. «Today we live a new phenomenon: globalization continues, the world is more interconnected than ever, but also under greater geopolitical tensions than at any time since World War II,» says Andrea Colli. «The great unknown is whether economic ties can contain those tensions or if, on the contrary, geopolitics will put globalization in check,» he adds. In the last three decades, Western companies had enjoyed a stable framework, growing in emerging markets and optimizing their costs, explains Jordi Canals, a strategic direction professor at the IESE and head of the IESE Foundation Chair in Corporate Governance. More information for example, a button: Volkswagen. Since the 1990s, the German car manufacturer was the paradigm of a global company, with good leadership in the Chinese market and large share in North America. «But it has lagged behind local electric cars and connected manufacturers, favored for 15 years with state subsidies. Now drag a difficult structural problem to reverse,» adds Canals. Currently, geopolitical instability is considered the greatest short-term threat to companies in all regions of the world-except in the United States, where the main concern is the economy-, according to the Global Corporate Affairs Survey Oxford-Globescan 2025.
Cost concern
Since 2020, geopolitical instability has consistently led the risk agenda, says Oxford-Globescan specialists. In 2025, 76% of corporate affairs professionals – found to manage the reputation of a company and manage their relationships with interest groups (stakeholders) – said that geopolitical risks are related to conflicts in Europe and the Middle East, the growing tensions between the East and West, and a renewed populism, including the return of Donald Trump to the presidency and the new Tariff The figure shows a significant increase from 47% of five years ago. «This anxiety is particularly high in regions and sectors very dependent on trade and global regulation,» they highlight. Geopolitical risk is the cost that companies have to assume after years of globalization. «When a country with strategic weight changes its rules of the game, the impact is huge. Russia, for example, has shown a willingness to use its military power aggressively in Ukraine and beyond,» says Canals. «And what makes it more dangerous is that the three great actors – United States, China and Russia – are unilaterally promoting policies that alter international trade and investment.» Geopolitical risks are deeply interconnected, which means that a single event can impact multiple areas of a company, according to a McKinsey report. To the aforementioned conflicts are added data theft and cyber attacks, often orchestrated by states, and have increased dramatically. The annual damage for these attacks is expected to reach 10.5 billion dollars by 2025, an increase of 300% since 2015, according to the consultant. Although some companies are rebuilding their technological assets, most do not moderate the impact of these risks until they occur. «By then, it is usually too late to mitigate damage effectively,» says McKinsey. «Companies are enormously unsuspecting,» says Colli. The Bocconi University Professor explains that many leaders from the big corporations, people in his 60s, graduated about four decades ago, in the decline of the cold war, when globalization promised new efficiencies and opportunities. At that time everything seemed to be aimed at an era of stability, a mirage that has collided with the complex of the current environment.