According to research by EY-Parthenon, reported by the Financial Times, political instability and economic volatility have eliminated $320 billion in profits across 3,500 major companies worldwide between 2017 and 2024. The major companies are defined as companies with an annual revenue of over $1 billion. This represents an unprecedented transfer of value from corporate balance sheets to the chaos of global events.

The impact extends beyond pure profit loss. In recent years, 40% of stock market movements have occurred on days when major geopolitical or economic events unfolded, demonstrating how tightly corporate fortunes are now tied to world affairs. One in four companies in the study suffered profit margin hits of 5% or more during this volatile period, marking a fundamental shift in how businesses operate in a time of increasing economic disruption.

The past few years have delivered a relentless series of shocks that shattered the relative stability companies had grown accustomed to. The onset of the Russia-Ukraine war sent energy prices soaring and disrupted global supply chains. The return of inflation after years of ultra-low interest rates forced central banks to dramatically shift monetary policy. The Israeli war on Gaza added another layer of geopolitical risk, while the UK experienced its own financial market meltdown that reverberated globally.

Donald Trump's return to the presidency has introduced fresh policy uncertainty, building on years of escalating US-China trade tensions that have forced companies to reconsider fundamental assumptions about global commerce. As Mats Persson, EY-Parthenon UK's macro and geostrategy leader, told the Financial Times, government policy and global events are now having "a greater impact on value and profits than in many decades."

Winners and Losers

The damage has been far from evenly distributed across the globe. China, for example, suffered substantial damage, with 40% of the 833 Chinese companies analyzed suffering profit hits totaling $73 billion in lost earnings. The losses were concentrated in sectors already under pressure, including real estate, steel, and construction, where government policy shifts and economic slowdown created a perfect storm.

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The United Kingdom showed greater resilience, albeit this may partly reflect its smaller sample size in the study. Only 14 out of 100 major UK companies that met the revenue threshold suffered significant losses, with a combined impact of $2.5 billion. This relatively modest hit suggests that UK companies may have been better positioned to weather global business disruptions or perhaps benefited from different exposure patterns to international volatility.

The United States presented a more complex picture, with significant variation between winners and losers. While many companies struggled with the new environment, some major corporations emerged as clear beneficiaries of the shifting landscape.

The winning formula

The companies that succeeded didn’t simply get lucky. According to the research, they shared several key characteristics that enabled them to either protect existing margins or achieve top performance relative to their peers.

Successful companies diversified their portfolios strategically, reducing dependence on any single market or product line that might be vulnerable to geopolitical shocks. They maintained disciplined cost management, ensuring they could weather downturns while positioning for recovery. Perhaps most importantly, they developed sophisticated capabilities for identifying and understanding policy changes, allowing them to adapt quickly rather than react after the fact.

These winners also updated their governance structures to reflect a fundamentally different world, moving away from strategies designed for stability toward approaches that embrace and navigate uncertainty as a permanent feature of the global economy.

Future implications

The research suggests that the old playbook for corporate success is obsolete. The era of cheap borrowing and predictable geopolitics that defined much of the 2010s has given way to a new reality where agility and global business resilience matter more than traditional measures of strength.

Companies can no longer treat political instability and economic volatility as temporary disruptions to be weathered. Instead, uncertainty has become the defining characteristic of the modern business environment. Government policy decisions now carry immediate, massive implications for corporate profits, requiring businesses to develop new capabilities for political and economic risk assessment.

The winners and losers from this period of chaos suggest that the new climate is creating distinct categories of businesses. Those that can successfully navigate geopolitical risk are pulling away from competitors, while companies built for the old world of stability are finding themselves increasingly vulnerable.