Political turbulence poses 'material risk' to business, report warns

Business leaders are being urged to treat political turbulence as a material commercial risk, as a new report warns that populism and disinformation are increasingly threatening corporate stability.  

An independent study by the Business and Democracy Commission finds that the boundary between business and public life is diminishing, exposing companies to heightened regulatory uncertainty and reputational risk. The report argues that political risk can no longer be managed as a peripheral issue.  

Based on interviews with senior executives and case studies, the commission identifies six areas of risk arising from a breakdown in the relationship between business and democracy, including rising populism and rapid political change. It concludes that failure to address these pressures could undermine firms’ licence to operate and long-term resilience. 

The report sets out a framework for navigating what it describes as a persistently unstable and polarised environment. Recommendations include aligning political engagement with core corporate values and incorporating political risk into governance and oversight structures.  

Tom Fife-Schaw, managing director of corporate reputation at Ipsos in the UK, said businesses were operating in an era of overlapping political, social and economic shocks, adding that organisations able to anticipate and absorb such pressures would be better positioned to retain trust. 

Alastair McCapra, chief executive of the Chartered Institute of Public Relations, said reputational risk in a highly charged political climate could no longer be managed reactively. Boards, he said, must embed robust governance and a coordinated approach to political engagement if they are to protect long-term value.