This article was first published in MIT Sloan Management Review and is available via subscription.
Increasingly, politics generates surprises that reverberate in boardrooms around the world. To navigate in the current era of political disruption, CEOs and their teams must understand and strategize for political risk.
BCG’s Adam Job, Nikolaus Lang, Ulrich Pidun, and Martin Reeves see political risk as materially different from other risk factors, and they offer companies a six-step approach to crafting a political risk strategy. But to successfully strategize for political risk and navigate turbulent times, the authors say three prerequisites are key: paying attention to factors beyond the company and its market, hiring experts who can analyze and triage political risk, and articulating company principles that remain stable even as political circumstances change.