The End of the Comfortable World

For much of my working life, business leaders operated within a broadly predictable global environment.

Looking back, it is striking how stable that period now appears.

When I first entered professional life, the defining geopolitical tension was the Cold War — the long rivalry between the United States and the Soviet Union. It created risk, certainly, but it was a structured form of risk. The rules of the game were understood.

Then came something very different.

From the early 1990s onward, the world entered what Ben Bernanke later called The Great Moderation. The fall of the Berlin Wall, the expansion of membership of the European Union, the opening of China to global markets, and the liberalisation of trade and finance created a long period of economic integration.

Supply chains stretched across continents. Capital moved freely. International institutions and rules — notably the World Trade Organisation — provided a shared operating system for business.

For a generation of executives, that environment became the norm.

Boards focused on growth, market expansion and operational efficiency because the geopolitical foundations of the system appeared settled.

That world has now ended.

At Acuti Associates, thanks to our colleague, Dr Tim Hames, we describe the new period as The Great Fragmentation.

It is not defined by a single event. Rather, it reflects a series of structural shifts over the past decade: the rise of economic nationalism, scepticism about globalisation, the use of tariffs, and a more assertive role for the state in shaping markets.

Alongside this sits a more volatile geopolitical landscape — visible in Europe, the Middle East and the Indo-Pacific — and a weakening of the international institutions that once acted as referees.

The result is a far more complex operating environment for businesses.

Some leaders, no doubt, hope that the world will revert to the conditions in which they built their careers. That, however, is becoming increasingly difficult to sustain. The forces reshaping the global economy appear structural rather than temporary.

This has significant implications for how boards think about risk.

During the long period of globalisation, risk registers focused heavily on operational and financial variables: supply chains, market share, regulatory compliance and reputational exposure.

Those issues remain important, but they are no longer sufficient.

Today’s business world demands a broader lens.

Successful business will be those who put political risk much closer to the centre of their decision making. Trade policy can change quickly. Industrial strategy shapes competitive landscapes. Defence spending and geopolitical tensions will increasingly influence fiscal priorities, which in turn affect public investment and social policy.

The effects can cascade through industries in ways that were once unusual.

I saw early examples of this dynamic during the Brexit negotiations.

Businesses that had spent decades operating within the rules of the Single Market suddenly had to confront the possibility that those rules would change fundamentally. Trade flows, regulatory alignment, labour mobility and investment decisions became political questions as much as economic ones.

Helping companies navigate that moment required more than technical analysis.

It required an ability to interpret how government thinking was evolving, how politics was shaping decisions, and how businesses could position themselves constructively within that debate.

That experience now feels like an early example of a wider shift.

Today, we see similar dynamics emerging globally. Recent events in the Middle East provide a vivid illustration. The current confrontation involving Iran, the United States and Israel, has disrupted airspace, shipping routes and energy markets across the Gulf, reminding businesses how quickly geopolitical tensions can spill into commercial reality. For companies operating internationally, the consequences are immediate: supply chains become less predictable, transport routes more fragile, and energy markets more volatile. It is precisely this intersection between politics, security and economics that characterises the new environment many organisations now face.

For leadership teams, this requires a different mindset when approaching strategy, business planning and risk analysis. At Acuti Associates, as part of responding to the Great Fragmentation, we interpret the external environment and translate it into practical strategic thinking. Through our close relationship with MagicDust Partners, that perspective is brought into the conversations, where these issues increasingly sit at the centre of decision-making.

Strategy can no longer be developed in isolation from the political and geopolitical environment. Understanding policy direction, regulatory momentum, and public expectations becomes part of core strategic thinking.

Equally, organisations must think carefully about credibility.

In a more fragmented world, trust and the skill to operate as partners alongside governments, regulators, employees and wider society becomes a strategic asset. Businesses seen as constructive and savvy participants in difficult debates tend to retain influence and stability even when the environment becomes turbulent.

Those who remain detached from those conversations often find themselves reacting to change rather than shaping it.

None of this means that global commerce is ending. International trade, investment and collaboration remain central to the modern economy.

But the conditions under which those activities take place are becoming less uniform and less predictable.

The comfortable assumptions of the Great Moderation no longer provide a reliable guide.

The Great Fragmentation requires something different: a deeper awareness of politics and policy, a broader understanding of risk, and leadership teams capable of interpreting complex external environments as part of everyday strategic decision-making.

That shift is already underway.

The question for organisations is whether they recognise it early enough to respond with clarity and confidence.

About the Author

Neil Sherlock CBE is a Partner at Acuti Associates. His career spans senior roles across government, professional services and corporate affairs, including partnerships at PwC and KPMG and public service, as a member of the Armed Forces Pay Review Body. He was also a Special Adviser to the UK Deputy Prime Minister in the Coalition Government. Neil has advised in these roles on regulatory policy, geopolitical risk and stakeholder strategy during periods of significant economic and political change.