“We have all grown up, personally and professionally, in a period that has been remarkably peaceful and stable and that influences our outlook,” says Fordham, founder of consultancy Fordham Global Foresight, during a virtual conversation hosted by Fortune in partnership with Diligent for their Fortune Director Roundtable Series.

She says that period of peace occurred between the fall of the Berlin Wall in 1989 and the 2007–08 Global Financial Crisis. Data tracking global deaths in conflicts since the year 1400 shows a steep drop throughout the 1990s and into the early 2000s. Across human history, this time of prosperity is a small blip, but the leaders of economies and companies today don’t know anything different.

That’s beginning to change, most notably because of the Israel-Hamas and Russia-Ukraine wars. 

“Geopolitics is rising up the ranks in terms of areas of risk that directors are concerned about,” says Dottie Schindlinger, executive director at the Diligent Institute. “That said, we also know from our research that directors aren’t quite sure exactly what to do about it.” 

Last year, the Diligent Institute just happened to conclude an annual study the day before the conflict broke out in the Middle East. The survey showed that only 7% of directors polled said geopolitical risks would greatly influence their ability to execute their business objectives in 2024. So far this year, as the survey is finishing up its work, 13% of respondents say geopolitics are a major risk. Today, three out of four directors surveyed rate geopolitical events as either “medium” or “high” risk.

“There’s sort of this understanding that we’re not spending a lot of time on this now, but when and if something happens, it’s likely to have major disruptions for us,” says Schindlinger.

Geopolitics can weigh on global business

But anecdotally, Schindlinger shares that when board members discuss geopolitics, they tend to focus more on national elections and the impact that potential legislation may have on their businesses. 

That’s a misunderstanding of geopolitics, according to Fordham. Geopolitics are cross-border actions that nations perform to project power, including war, espionage, sanctions, and tariffs. “Geopolitics is about power,” she says. “Power first, money comes after. It’s the other way around for most people in business.”

The latest global conflicts highlight the impact that geopolitics can have on global business. Russia’s invasion of Ukraine led many Western companies, ranging from Exxon Mobil to H&M to Nike, to close their stores and pull their investments from Russia. Several Russian banks were booted from the financial infrastructure known as Swift, a move meant to complicate trade and foreign investment.

Those actions were unprecedented and highlight the risks that geopolitics presents, especially to supply chains. The invasion of Ukraine led to big fears about a spike in food prices, which did occur to some extent but wasn’t as bad as some had feared. 

“As dramatic as that was, the integration and the dependence between Russia and other countries in the world is tiny compared to if something like that were to happen with China and the United States,” says Fordham. 

Markets have also been complacent about risks in the Middle East, even as escalation continues to grow. “But one unexpected manifestation of the Middle East risk has been consumer boycotts and the protests in the United States,” Fordham warns.

Starbucks and McDonald’s are among the U.S.-based multinational companies that have faced protests for their perceived support of Israel in the ongoing military conflict in Gaza. These protests are an example of why boards and C-suite leaders should rethink their standard approach to geopolitics. Typically, Fordham says, a retired general or similar global expert is brought in once a year to provide some strategic advice. 

Under pressure on the social front

Beyond warfare, boards are also facing pressure from employees, consumers, and their shareholders about whether to engage in social issues. More recently, chief executive officers have taken a quieter stance on news events like the Israel-Hamas war. Most have been backing away from talking about politically fraught topics like diversity and inclusion or climate change. When they do highlight their work on these issues, they are softening the language to avoid getting ensnared in a culture war.

“What I observe is a deep sense of uncertainty from the C-suite and boards about what they’re supposed to do right now in this environment,” says Fordham.

Employees, especially younger workers, are calling for corporate leaders to talk more about the cultural issues of the day. But at the same time, shareholders and board members are more inclined to put the greater focus on their core business and growth.

“I’m having conversations with boards right now saying, ‘We know there’s a lot of geopolitical risk. We want to talk about growth,’” shares Fordham. “Fair enough. How do you do that without thinking about risk? I don’t think you can.”