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The crisis in the Middle East has accelerated global instability, exposing businesses to permanent volatility and a fracturing rules-based order.
Boards are urged to move beyond risk checklists, implementing robust crisis and business continuity plans.
Practical steps include identifying critical operations, securing supply chains and training staff to sustain operations amid geopolitical and systemic disruptions.
As directors watch oil prices spike and energy supply forecasts tumble, governance expert David Moffatt warns that six critical steps must be taken or operations could grind to a halt amid the harshest energy shock in modern history.
Petrol supply disruptions, serious challenges to the global rule of law and extreme market volatility were not items many expected to dominate agendas as 2026 began. But the calculus shifted abruptly in early March, when the US and Israel declared war on Iran.
As the conflict drags on and messaging grows more opaque by the day, the window for hesitation has closed. Boards are being urged to act – to assess exposure, stress test assumptions and put in place plans to safeguard business continuity. Directors are being told they are no longer managing volatility, they are managing permanent instability.
Speaking to Company Director, Mark Thirlwell GAICD, chief economist at the AICD, said the current war in the Middle East is “yet more evidence of a fracturing of the old global order”.
“The global security order is clearly splintering, from the 2022 Russian invasion of Ukraine to this year’s conflict in the Persian Gulf,” says Thirlwell. “Meanwhile, populist politics are on the march across the developed world and partly as a result, previous policy settings from migration to central bank independence are under pressure.
“That shift in the political economy environment is also manifesting in growing public sector debt burdens, which bring with them their own financial vulnerabilities.”
Layer onto that an international system increasingly exposed to adverse supply shocks – driven not only by geopolitics, but by demographics, climate pressures and the accelerating AI transition – and the margin for error narrows.
“For boards, all this means the range of potential economic outcomes has widened significantly, even as policy predictability is falling,” says Thirlwell. “The implication is that the premium on building resilience has increased.”
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Six steps to action today
For Dr Merriden Varrall MAICD, geopolitical strategist and insights consultant, the war in the Middle East is less about oil and shipping, “it’s about how nation states justify the use of legal force”.
“That is the big change,” she said at the AICD’s recent governance summit. “If we now are in a world where it’s OK to declare a war on fairly uncertain foundations, without going through your domestic processes as you’re supposed to and without consulting allies or other interested parties, that fundamentally changes the rules-based order that we in Australia depend on to be able to do business”.
She asks, “How do we then do business in a world where the rules-based order has been stretched out of shape and won’t go back?”
For boards, the implications are immediate and non-negotiable. According to Moffatt, chair at Ventia MAICD, it is no longer enough for boards to list geopolitics as a line item on their risk agenda, real, actionable steps need to be in place – and quickly.
“If you as a board haven’t considered the question of how you would sustain core operations in the face of no telecommunications network, your operating systems being turned off, interruption to your fuel, water and even food security, then your board hasn’t moved geopolitics from a peripheral issue to a mainstream issue, and it probably needs to shift,” he says.
Navigating a more contested and less predictable world demands disciplined crisis management and business continuity planning, Moffatt stressed.
He explains that crisis management planning is a two-step process encompassing risk or threat assessment, and the response protocols an organisation will deploy in an emergency. Business continuity planning, by contrast, “aims to ensure that an organisation will continue to operate despite disasters, adverse events, nefarious acts or other calamities that temporarily, or even for an extended period, interrupt the ordinary course of business”.
Moffatt outlines a six-step approach for directors:
Determine which functions and processes are critical to the organisation’s survival and sustainability, and understand the impact if they are disrupted.
Establish clear communication channels for internal and external stakeholders to ensure timely and accurate information during a crisis.
Implement plans for remote work and prioritise the health and safety of employees and their families above all else.
Assess how key customers, suppliers and partners might respond to sudden disruptions, including impacts on supply chains, potential legal and financial risks, vulnerability to deliberate damage, and whether sufficient liquidity exists to continue meeting obligations.
Develop strategies to manage supply chain risk, including diversifying suppliers and sourcing options wherever possible, and consider scenarios where operations may need to shift to secondary locations.
Regularly train employees so they understand their roles and responsibilities in the event of a major disruption.
“Businesses must develop plans and processes to ensure they can maintain operations and availability during unexpected disruptions,” says Moffatt.
Not preparing for a complex, volatile and structurally shifting security environment, he warns, “would be foolhardy”.
“In other words, unexpected events can make the details of many plans irrelevant or anachronistic, but the very process of planning helps ready an organisation for whatever may come next.”
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