In a volatile world, businesses need to focus on what they can control

Businesses have always had to navigate uncertainty, whether that was the 1970s oil crisis and implementation of the three-day week, economic recessions, natural disasters and weather-related incidents, or geopolitical events.

However, research suggests there is a strong feeling among business leaders that the multiple and accumulating layers of uncertainty, as well as the rapid emergence of new risks and pace of change, is a defining theme and one of their top concerns in a way that has rarely, if ever, been seen before.  

Top of the list of concerns is the disruption already being caused by technology. AI is a major disruptor that is likely to create winners and losers based on who best harnesses its potential. Meanwhile reconfigurations of global power dynamics and regional conflicts have impacted on energy security and supply, at a time when energy demand is only growing.

Add in political uncertainty at home – where the UK is now on its seventh prime minister in less than a decade – and the resulting market volatility, as investors attempt to assess the implications of the new prime minister’s policy agenda. Matters are no more certain abroad: with US midterm elections looming, predicting which party will control the House of Representatives and the Senate remains a considerable challenge. Combined with a backdrop of historically low levels of trust in politicians on both sides of the Atlantic, and it is unsurprising that business leaders and their organisations are feeling the impact.

Markets are fragile amid this volatility, with some – including the Bank of England, in strong terms – pointing to asset prices hitting record highs and warning of an impending market adjustment. Any stock market shock could impact the economy in a number of ways, including a fall in household wealth and consumer spending, a rise in unemployment, a drop off in investment, and an increase in corporate restructurings and insolvencies. 

In the background to all this, we’ve also seen a shift in lending dynamics away from traditional “stable” institutions, like mainstream banks, towards private credit providers – who are less predictable, often able to move more quickly on enforcement options, and less transparent. Traditionally, banks wanted to be seen as relationship driven and had also had an eye on reputational risk which, for the most part, drove good behaviour in working with businesses where possible. How non-traditional lenders will deal with businesses in financial difficulty, if there is a major market reset, is yet to be tested and for some businesses this is yet another layer of uncertainty.

For many business leaders, considering and evaluating the risks, particularly when the landscape is constantly changing, must feel like an impossible task that gets put in the “too difficult” pile. 

Perhaps there is current wisdom in the ancient idea that it’s not what happens to you, but how you react that matters. It is unsurprising that many business leaders feel overwhelmed by the sheer volume of current risks, but attempting to predict or control every element of uncertainty is neither realistic nor productive. The more effective response is to focus on resilience: understanding where a business is exposed, and planning for a range of outcomes. In an era being defined by uncertainty, competitive advantage can’t come from anticipating every risk, but from clarity of strategy, agility in execution, and the discipline to act decisively when it matters most. 

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