Review of High Stakes: A Framework for Geopolitical Risk Management by David Fagan and Meg Rithmire. US Chamber of Commerce Foundation, 2025.
The US Chamber of Commerce Foundation this week released a report underscoring the challenges companies continue to face in managing their China-related risks. The report recommends that firms set up a risk management committee, a necessary but not sufficient step, reinforcing how much more work remains to be done.
Authored by David Fagan, a partner at Covington & Burling, and Meg Rithmire, a professor at Harvard Business School, the report draws on surveys and interviews with members of the US Chamber of Commerce (USCC) and Association of Corporate Counsel. These firms have varying postures in China as a supplier, competitor, and customer.
Today, some 85% of USCC members cite China as a geography of concern, more than any other country: even this should be recognized as progress compared to the years in which executives routinely downplayed their risk. In response, firms are most commonly undertaking scenario planning, engaging external consultants, and initiating new due diligence processes.
Fagan and Rithmire are right that firms need to do a better job of putting business, operations, legal, finance, technology, security, and personnel leaders in dialogue with each other to make more informed decisions. They are also right to recommend direct channels between a firm’s geopolitical risk practitioners and senior management and the need to empower them with the authority to drive changes where they are needed.
Still, several elements would have made the report more compelling.
Emphasizing strategy, avoiding bureaucracy
First, no amount of improved process or governance can compensate for a geopolitically flawed strategy. Well before a geopolitical risk function begins taking on the discrete, forward-looking operational decisions, it should first conduct a holistic review of the firm’s strategy. The authors highlight the nature of a firm’s engagement in China and the degree to which its industry is central to US-China competition as key factors. This should also be weighed alongside the perceived strategic value (or lack thereof) that the firm’s presence in China delivers for that country, and how geopolitical dynamics are impacting broader flows of goods, services, information, capital, and people on which the firm may depend.
The report could also have done more to caution against geopolitical risk functions becoming too centralized and bureaucratic. The fewer decisions they are directly called upon to make, the better: instead they should find ways to empower frontline leaders with actionable frameworks. That will free the group to spend more of its time holistically assessing the risk landscape, running robust scenario planning that draws out the interconnections between risks, and creating actionable response plans.
Time horizons and mindsets
Geopolitical risk leaders must balance short- and long-term framings. Despite the familiar critique that American firms are too short-termist, Fagan and Rithmire find that many firms are betting on the return of Chinese economic reform and structural rebalancing. But this optimism runs the risk of colliding with the truism that markets — and governments — can remain irrational longer than firms can remain solvent. Geopolitical risk teams can serve an important function here by building systems that allow their companies to flex and pivot quickly — not just in response to geopolitical shocks, but also to abrupt market shifts.
They must also remain attuned to both risk and opportunity. In a moment of deep pessimism, the authors are right to include voices of executives who say it is not cost advantages that keep them in China, but the competitive edge gained by operating in one of the world’s most dynamic markets. Truly strategic geopolitical risk functions must incorporate these opportunity lenses — and be just as quick to flag underappreciated upsides as they are to raise red flags. The most forward-leaning should be seeking to proactively influence the policy environment itself.
Connecting the dots
Better coordination within a firm is only the beginning: stronger connectivity to other firms and government remains a work in progress. The report suggests industry associations are best positioned to facilitate information sharing and address collective action problems. More aggressive approaches may be needed such as more joint ventures among international firms in China, shared investments in supply chain diversification, or pre-competitive coordination on resilience strategies.
With respect to the government, the report acknowledges that firms operating in China and Washington “each hold deep and relevant information unavailable to one another.” These pages have previously called for a national economic security council that could serve as a more consistent forum for engagement.
Building talent
Talent is another underemphasized dimension of geopolitical risk management. Many firms have inconsistent access to individuals with a sophisticated mix of business, functional, China context, and a global (as opposed to Washington- or Beijing-centric) mindset. Geopolitical risk functions can play a role in encouraging rotations that more intentionally cultivate this kind of talent.
There is also the delicate question about how to involve employees who are Chinese nationals in geopolitical risk discussions, weighing the sensitivity of the issues, the risk of forgoing certain forms of expertise, and the possibility that exclusion will hinder the execution of whatever is ultimately decided.
Externally, as geopolitical risk firms proliferate, more work is needed to ensure they are delivering real value, perhaps by rankings similar to those given to investment banks’ research teams.
A role for shareholders
Finally, geopolitical risk management will be stronger if there is a role for shareholders. A say-on-exposure proxy vote or tracking stock against a firm’s China business are two of several ways in which they can send signals that help managers better assess tradeoffs. Major institutional investors, with whom firms regularly meet, can do more to develop and convey their own differentiated perspectives on geopolitical risk in ways that constructively challenge firms’ thinking.
No amount of geopolitical sophistication will make up for commercial inferiority — or a world in which firms are reduced to mere instruments or targets of state power. Firms’ best strategy is to continue delivering value for society — and defending the openness and the rule of law on which their success depends — a foundation which presently feels so tenuous. Now, and for the foreseeable future, the most consequential risks for American firms are closest to home.