The Year of Election Angst

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By: Peter Lauria

Sitting US presidents running for reelection don’t typically walk on picket lines with striking workers. But there was President Biden in Michigan last fall, throwing his support behind auto workers to gain their support—in what promises to be a grueling 2024 election.

Politics and business have always been intertwined, of course, but in recent years they seem to have merged into one big ball of risk for corporate leaders. Whether it’s US trade tensions with China, Russia’s invasion of Ukraine, or the Israel-Hamas war, corporate leaders consistently rank geopolitical risk among the top concerns for the global economy and business. “The tensions have elevated the business risk for leaders in a way that it wasn’t 10 or even five years ago,” says Michael Faulkender, former assistant secretary for economic policy at the US Department of the Treasury and a professor of finance at the Robert H. Smith School of Business at the University of Maryland.

The 2024 election cycle will be a pivotal one for business leaders. In the US, for instance, an improving economy is welcome news, but cultural and social issues that are likely to take center stage in a potential Biden-Trump rematch—from gun control to abortion—could prove precarious for business leaders to navigate. Nels Olson, vice chairman of the Board and CEO Services practice and global leader of government affairs at Korn Ferry, says the combination of economic and social issues “will make it challenging for many CEOs to balance corporate financial interests.”

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But it hardly stops in the US. Across the world, countries representing more than 50 percent of global GDP are holding elections, the outcomes of which could hold significant ramifications across many industries. Take India, for instance, where Prime Minister Modi is running for a third consecutive term. During his tenure, he has pursued policies to position India as a manufacturing alternative to China for international companies, particularly in the technology and clean-energy sectors. The fact that India has grown into a viable option for US companies seeking to mitigate supply-chain disruption has further exacerbated tensions with China. “The relationship between India and China has not only soured, but also become increasingly hostile,” says Navnit Singh, chairman and regional managing director in India for Korn Ferry, noting that China skipped the G20 Summit in India.

In Europe, elections in the UK for Prime Minister, along with those in 27 other countries for EU national representatives, may decide cross-border cooperation with businesses. One sensitive area: climate commitments. Soaring energy prices, coupled with a stagnant economy, have led to heated contests over the economic cost of focusing on climate change, creating vulnerabilities for some incumbent representatives. For business leaders, who are increasingly being held to ESG targets, the progress of climate pledges—whether they’re being slowed down, accelerated, or continued—not only complicates regulatory reporting requirements, but also poses reputational harm should companies pull back on their targets because of looser government oversight.

The increasing exposure to geopolitical risk is one reason firms have been devoting resources to build out their government and corporate affairs functions. But for most companies, strategic planning around geopolitical risk is poorly understood, says Heather Heldman, managing partner of Luminae Group, which advises business leaders on vulnerabilities and opportunities in the geopolitical environment. “A lot of leaders still conflate security with business when it comes to geopolitical risk,” says Heldman, noting that they think in terms of “protecting against losses.” She points to the war in Ukraine as an example, saying that by the time firms got around to analyzing the consequences of continuing to operate in Russia versus pulling out, it was too late.

“The possibility of geopolitical disruption is always on the horizon,” says Heldman. “Good risk mitigation means understanding the probability and anticipating where you are vulnerable and where there are opportunities."