According to EY-Parthenon's Geostrategy in Practice survey, in 2021 26% of boards took action across relevant geostrategy areas. By 2025 that figure had tripled to 76%.
In 2021 geopolitical risk was not considered a boardroom priority. By 2025 three quarters of boards were actively addressing it.
That shift happened because the world forced it.
Russia invaded Ukraine. China weaponised its control of critical minerals. The US became a source of instability rather than a guarantor of it.
The specific risks vary by sector, jurisdiction and investment strategy. What does not vary is the obligation to understand which of them apply.
The question is not whether boards are aware. The question is whether their governance and risk frameworks have changed in response.
Personal. Not abstract.
For most of the last decade, geopolitical risk sat in the risk register alongside climate change and political risk, acknowledged but rarely driving discussion in jurisdictions where political stability has long been assumed.
That era is over.
In 2026, for the first time in the history of the WTW Global Directors' and Officers' Survey, geopolitical risk entered the global top seven risks for directors and officers, up from fifteenth place the previous year. 59% of directors and officers now consider geopolitical risks to be very important or extremely important to their organisation.
OFAC's 2025 enforcement actions demonstrate an increased willingness to impose liability on individuals and professional intermediaries. Across these cases, OFAC repeatedly emphasised that sanctions compliance obligations extend beyond formal corporate boundaries.
In practical terms: the director is now within scope.
On 2 December 2025, OFAC announced an $11 million settlement with IPI Partners, a Chicago-based private equity firm, for 51 potential violations of Russia-related sanctions. OFAC found that IPI solicited and received investments from a Russian oligarch via his representative, and should have blocked those funds following OFAC's designation of that individual to its Specially Designated Nationals list. The firm had received legal advice suggesting it was not required to block the investment. OFAC's position was unequivocal: that advice, based on incomplete facts, did not absolve the firm from liability.
Individual liability featured prominently in OFAC's enforcement of Russia-related sanctions in 2025, with three of the publicly announced enforcement actions directed against individuals. All three matters involved dealings with sanctioned Russian oligarchs or their property or interests in property.
OFAC's direct jurisdiction is over US persons and US-connected transactions. In practice, the vast majority of offshore fund structures, through US investors, US general partners or US dollar financing, carry OFAC exposure that makes its enforcement actions directly relevant to directors in Guernsey, Cayman, Jersey and beyond.
The message to directors is clear. Sanctions compliance is not something a director can delegate away. The compliance function supports it. The board owns it.
The beneficial ownership question
For directors the sanctions question connects directly to beneficial ownership, who ultimately owns or controls the investors in this fund?
The beneficial ownership look-through regime has been significantly strengthened across multiple jurisdictions. The Cayman Beneficial Ownership Transparency Act 2023, with enforcement from 2025, means that understanding who stands behind an investor, through layers of intermediary structures, is now a regulatory obligation for directors, not a due diligence aspiration.
OFAC's guidance on the IPI enforcement was explicit on this point. OFAC emphasised that sanctions determinations turn on substance over form, and that reliance on formal ownership percentages alone is insufficient where facts suggest a sanctioned person exercises practical control or decision-making authority over a counterparty.
Understanding the beneficial ownership of a fund's investor base and understanding the fund's sanctions position are inseparable. One cannot be answered without the other.
Guernsey and Cayman - different trajectories, shared pressure
The jurisdictions most relevant to this readership have had markedly different recent experiences with the international AML and sanctions framework, and both carry lessons worth understanding.
Guernsey achieved a highly successful outcome from its MONEYVAL assessment, becoming one of only three jurisdictions globally, alongside the UK and the US, to achieve a high level of effectiveness rating for its implementation of sanctions. Guernsey was ranked second in the MONEYVAL peer group for the quality of its supervision. The result confirmed Guernsey's position as one of the world's most rigorously regulated financial services jurisdictions.
Cayman's trajectory over the same period illustrates both the resilience of well-governed jurisdictions and the scale of expectation now embedded in international standards. Added to the FATF grey list in February 2021 and removed in October 2023 having met all 63 required action points, Cayman now prepares for the FATF's fifth-round evaluation. The onsite phase is expected to commence in late 2027. The fifth-round places greater emphasis on effectiveness over technical compliance, meaning regulators will assess whether governance frameworks are genuinely working, not merely whether they exist on paper.
For directors of Cayman-regulated structures, the preparation period that began the moment the grey listing was lifted is now entering its most consequential phase. The standards applied in the fifth-round will be stricter than those of the fourth. The expectation of documented, evidenced, genuinely effective governance is not aspirational. It is what the evaluation will test.
For directors of Guernsey-regulated structures, the MONEYVAL consultation published on 30 July 2026 proposes further Handbook and legislative changes responding to the assessment recommendations. The standard Guernsey has demonstrated is now the standard it is expected to maintain.
Investment screening - a new governance obligation
The rise of economic statecraft, the use of tariffs, export controls, investment screening and forced divestiture as tools of foreign policy, has blurred the traditional boundary between commercial risk and political risk. Decisions that were once primarily commercial in nature now carry significant geopolitical dimensions.
The UK National Security and Investment Act 2021 has matured into an active regime. Between April 2024 and March 2025, 1,143 notifications were received, 26% more than the previous year. The NSIA regime is being expanded to cover critical minerals, semiconductors and water.
In the United States, the COINS Act, signed into law on 18 December 2025 as part of the FY2026 National Defense Authorization Act, codifies and expands the outbound investment security program. It restricts certain investments by US persons in China, Hong Kong and Macau and will be expanded to cover Cuba, Iran, North Korea, Russia and Venezuela.
For directors the significance is direct. Any structure with US investors, US general partners or US dollar financing making investments in covered sectors, semiconductors, AI, quantum computing, in covered countries now operates within a mandatory notification and potential prohibition regime. That is not a legal team matter. It is a board-level one, that must be asked before investment decisions are made, not after.
The aggregate effect of overlapping screening regimes is significant. A single cross-border acquisition in a sensitive sector may now trigger parallel review under NSIA, CFIUS, the EU Foreign Subsidies Regulation and national FDI screening across multiple member states simultaneously. Directors who ensure they receive structured briefings on this landscape before investment decisions are made are demonstrating exactly the kind of proactive governance the role now demands.
The supply chain and the regulatory trap
For some the geopolitical risk that receives the least boardroom attention is often the most operationally immediate.
In April 2025, China introduced export controls on heavy rare earth elements and permanent magnets. The result was a 51% drop in exports in a single month. Plants shut down across Germany and Austria. Suzuki halted production of the Swift. Chinese authorities approved only 25% of export licence applications. China controls over 90% of global processing capacity for these materials, essential to electric motors, defence systems, semiconductors and medical equipment. The B7 convened in Paris in May 2026 specifically to address critical supply chain security. The conclusion was unambiguous: supply chains are no longer a back-office concern. They are a board-level imperative.
For directors with exposure to technology, defence, energy transition or manufacturing assets this is a current governance question, not a future strategic consideration.
The complexity deepens for directors with cross-border exposure. Actions that comply with US sanctions obligations, moving supply chains away from China, conducting supply chain due diligence, may simultaneously create exposure under Chinese law. Complying with one jurisdiction's requirements can conflict directly with another's. There is no position from which both sets of requirements can always be simultaneously satisfied. Directors must understand where their structures sit within that tension, and ensure their boards are receiving the specific briefings needed to navigate it.
Defence investment - governing a sentiment reversal
One further dimension of the current geopolitical landscape deserves attention: the ESG sentiment reversal in defence investment.
Assets that institutional investors systematically excluded from portfolios on ESG grounds three years ago are now widely regarded as essential infrastructure. The shift has been rapid and governance frameworks are still playing catch up.
For directors with defence exposure, the governance obligations are specific. Ownership structures must be understood. End use must be assessed. Export controls must be actively monitored. Sanctions exposure, including through supply chain and counterparty relationships, must be regularly reviewed.
The investment rationale for defence has changed. The governance requirements have not. Directors of defence-exposed boards who ensure their governance frameworks reflect the specific obligations of the sector are well positioned for the scrutiny that will inevitably follow.
We explored the governance implications of the defence asset class in detail in an earlier edition of the MyDirector-OS Journal. For directors navigating this shift, it is worth reading alongside this piece: What's Your Defence? — mydirector-os.com/blog/whats-your-defence
What good governance of geopolitical risk looks like in 2026
The interconnection between geopolitical risk and supply chain risk is a defining feature of the current landscape. The two must be considered together.
The practical question for directors is not whether to take geopolitical risk seriously, the WTW survey, the OFAC enforcement data and the rare earth supply chain disruption have answered that collectively. The practical question is what good governance of geopolitical risk actually looks like.
It starts with information that is specific, not generic. What matters is the specific sanctions exposure of the investor base and portfolio companies. The specific investment screening obligations triggered by current and anticipated deal flow. The specific critical mineral dependencies of portfolio companies in relevant sectors. Specific information enables specific governance.
It requires specific questions at board level. Not "what are our geopolitical risks?" but: Has our beneficial ownership picture changed, and does any change carry sanctions implications? Are any pending investments subject to NSIA, CFIUS or COINS Act notification obligations? What is our exposure to critical mineral supply chains dominated by a single jurisdiction? Do any portfolio companies have end-use or counterparty relationships that create export control obligations?
It requires directors who are equipped to ask those questions and interpret the answers. The boards and directors who feel most confident in an era of geopolitical uncertainty are those who have built both the information flows and the board-level fluency to act on them.
And it requires the recognition that geopolitical risk is now structural, not episodic. The forces driving it are not resolving. They are deepening. The boards that will navigate this era most effectively are those that have made geopolitical risk a standing item, not a reactive one.
The world has changed. The board's role within it has changed with it. The directors who recognise that, and who have the information, the specific questions and the governance framework to act on them, are the ones who will navigate what comes next.