Our Take
Leaders think they're ready for geopolitical risk; McKinsey's data says they aren't—and the gap is widening, not closing.
Why it matters
Supply chain disruptions, sanctions, and regional conflicts now move faster than corporate response systems. Companies that audit and rehearse specific scenarios avoid the costly improvisation that derailed peers in 2022-24.
Do this week
Chief Risk Officer: map your supply chain's top five geopolitical pinch points and run a 48-hour response simulation before Q2 budget freeze, so you know which decisions require board approval.
McKinsey survey reveals widening gap between risk exposure and readiness
McKinsey's survey of company leaders found a consistent pattern: executives rate their exposure to geopolitical risk as high, but their confidence in their ability to respond remains misaligned with that exposure. The gap between perceived risk and actual readiness is widening, not narrowing (per McKinsey Insights).
The firm identified five actions that companies can deploy to strengthen their preparedness across a range of geopolitical outcomes, not just worst-case scenarios. These actions move beyond static risk assessment into active scenario planning and organizational rehearsal.
Gap between assessment and responsiveness creates blind spots
When executives believe they understand their risk but lack confidence in their response capability, the practical result is delayed decision-making during actual crises. This is not a theoretical problem. Companies that experienced supply chain fractures, sanctions exposure, or rapid market access loss in recent years often cited speed of internal decision approval as a bottleneck, not awareness of the threat.
The widening gap suggests that awareness campaigns and risk frameworks are not translating into operational readiness. Leaders can name the risks. They cannot yet execute the response.
Five actions move from assessment to rehearsal
McKinsey's framework pushes past the common trap of static risk matrices. The five actions center on scenario-building, cross-functional coordination, decision authority pre-assignment, supply chain mapping, and tabletop exercises tied to specific geopolitical triggers.
The emphasis on "a range of outcomes" is deliberate. Companies that plan only for worst-case scenarios often miss mid-severity disruptions that still demand fast choices but allow more time for deliberation. Building decision playbooks for multiple severity levels—and testing them with finance, operations, legal, and the C-suite together—closes the execution gap faster than adding more risk staff.
The practical entry point is not a new risk committee. It is identifying the three to five geopolitical scenarios most likely to hit your supply chain, your market access, or your workforce within 18 months, then naming who decides what within the first 24 hours of each scenario. Once roles and decision gates are clear, run a dry run. The gaps emerge immediately.