The erosion of the global order, our decades-old geopolitical comfort zone, is one of the more unsettling developments since the collapse of the Soviet Union in 1991. The nuclear-tipped US-Soviet standoff was one of the more predictable and oddly stabilising features of the Cold War. It was tense: enormous atomic arsenals were pointed at each other and ready to fly at a moment’s notice. But once you got used to it, you could get a lot of work done.

Now, there’s nothing to get used to. Geopolitical conflict seems constant and overlapping.

The problem with the current period of disruption to our geopolitical framework is that it defies easy categorisation. Are we in a transition period on the way to a new global order? If we are, what will it be, and how long before we get there? Or, is transition the new permanent state of affairs, where the US retreats from its role as the global sheriff, no single state actor takes its place and we are left with ongoing, rudderless turmoil?

Who is in control?

We have been here before. Rawi Abdelal, the Herbert F. Johnson Professor of International Management at the Harvard Business School reminds us that the world was once governed by a UK-centric system. We are now—perhaps—in the end phase of the US-centric system. Abdelal does not believe the leader of the next phase has emerged yet.

“We’re not on the verge of a Sino-centric system,” he said. “There are lots of questions about the trajectory of Chinese growth.”

If history is cyclical, we will at some point reach a new equilibrium, enjoy the stability it affords for a while and then wait until some new disruptor emerges to upset the status quo. If history is linear, then disruption remains a more permanent feature as we all lurch forward in a direction that becomes difficult to forecast.

“The war in Ukraine, much like the war in Israel and Gaza, and a number of other regional wars, are manifestations of a disintegrating world order,” Abdelal said. “And insofar as the ongoing disintegration of the global order requires every company in the world to have a point of view about geopolitical risks, then yes, this is a new era.”

Abdelal caught himself and made a telling correction.

“Well, this is an era that resembles basically all of the other eras that existed, except for 1945 to 2010,” he said.

In other words, prolonged periods of peace and growth are the exception, rather than the rule, in geopolitics. The relatively peaceful, prosperous period following the second world war is, however, our only recent point of reference. This is when today’s world grew up, professionally and otherwise. The executives running companies today have never had to navigate a period of constant, intense conflict.

Nokian Tyres once manufactured 80 per cent of its tyres in Russia; Russian consumers bought 20 per cent of the tyres Nokian made. After the full-scale invasion of Ukraine, the company left Russia and began constructing a new factory in Romania. As Nokian looked for a place to site its new factory, it had a list of all the usual investment criteria, but, as Patricia Cohen in The New York Times reported, the new site had to be in a country with two other “make or break” criteria: it had to be in the European Union and NATO.

“Geopolitical risk ‘was the starting point,’” The New York Times said, quoting Jukka Moisio, CEO and president of Nokian. Even Hungary, which ticked the two most important boxes, was ruled out because of the politics of its leader, Viktor Orbán.

Stop chasing swans

After years of languishing in the “nice to know” category, geopolitics and political risk are finally at the top of most international companies’ agendas, up to and including at board level. Too many companies have been burned in too many markets for these issues to go unexamined any longer.

Understanding the way countries and companies interact is now in the “have to know” category. This new level of awareness is a positive development, but it is only the beginning of managing risk better. Now that companies know they need to talk about geopolitics, they need to understand how to do it well.

In the past, companies dealt with risk in a highly unproductive manner. They made a fetish of former US defence secretary Donald Rumsfeld’s phraseology and wasted their time pondering the “unknown unknowns”.

Then came Nassim Nicholas Taleb and his concept of “black swans”. This framework was a bit more elegantly and elaborately presented than Rumsfeld’s linguistic cocktail, so companies spent time and money looking for precisely where a meteor might fall from outer space and hit them in the bottom line. Predicting black swans is an oxymoron—by their very nature, black swans are meant to be unpredictable. Perhaps also not the best use of an executive’s time.

More recently, the risk vocabulary has alighted on a more productive place. Smart companies are now trying to grasp “emerging risks”. These are a category of potential events, trends or issues close enough to be known to us. But they are still far enough away to be slightly out of focus, and unpredictable. Ruling in or ruling out these emerging risks is still difficult to do, so companies monitor them. Some will increase in importance; others will recede from relevance. But they are topics that bear regular monitoring.

The very exercise of naming, categorising and prioritising these risks for a company is time extremely well spent. Among other things, it helps create a shared vocabulary of risk, something most companies sorely lack.

Listen to governments (with one ear)

Governments encouraged their private sectors to invest in Russia; companies not only listened but believed. Even if there was a significant peace dividend to be harvested from a more democratic and market-oriented Russia, companies should learn to listen to government pronouncements on emerging markets more critically. The US made the same mistake with China that it did with Russia—as China developed, America thought that with enough time and enough money, China’s system would converge with the United States’.

“The Russian example of 1991-1992—you had the US government encouraging US firms to pile into Russia: ‘Let’s get in there,’ and most of them were just running with it and it ended up going badly,” said Cameron Mitchell, former head of geopolitical risk for HSBC in London.

That has not prevented the same thing from happening with the United States’ views on China, Mitchell said. US engagement with China was based on “convergence theory,” or the assumption that “engage China and their political system will liberalise the way their economy has. The US government was encouraging everyone to pile into China, and now they’re saying, ‘Get out of the Chinese market.’”

Geopolitical interests do not always align with commercial interests. They could, but they don’t. The internal geopolitical risk function is there “to warn [companies] against whatever the government of the day is saying, because it may change on a dime because of the geopolitical risk reality out there,” Mitchell said.

Where is the stage? Who are the actors?

The question returns to the role and position of the company in geopolitics.

“When the firm meets the sovereign in a struggle, the sovereign always wins,” Abdelal said on the interaction of company and state. “If the sovereign means it, if we want to destroy Microsoft, we can destroy Microsoft. If we want to destroy Apple, we can destroy Apple.”

Shareholders in Microsoft and Apple, worry not. Or don’t worry too much. There are only a small handful of nation-states that wield that sort of power. And it’s not certain that any of them want to.

As for companies, some can influence geopolitics; others can’t.

“There are lots of firms that exert influence on the world without directly shaping the geopolitics of the world,” Abdelal said. “And there are lots of firms that exert influence on the world while simultaneously reshaping the geopolitics of the world.”

If you’re a company with significant geopolitical weight, CEOs and boards beware.

“Corporate strategy produces geopolitical outcomes,” Abdelal said. “Building Nord Stream 2 [a gas pipeline from Russia to Germany under the Baltic Sea] was a geopolitical outcome. It began to disintermediate Ukraine. It created fissures in the European Union.”

It might be interesting to measure which group is larger: countries that can meaningfully influence companies, or companies that can meaningfully influence countries.

That’s the subject of a different book.

Charles Hecker is a geopolitical risk consultant. This article is based on an extract from his forthcoming book, Zero Sum: The Arc of International Business in Russia (Hurst Publishers).