How are boards and executives managing hyper-volatility?

As business leaders and boards set their sights on 2026 while trying to finish 2025 strong, they take stock of a global business environment that is paradoxically promising and unpredictable. Effective leaders thrive in the face of hyper-volatility. They build financial resilience by using a combination of analytics and storytelling and implementing strategies that not only manage volatility but also drive performance and value creation.

The National Association of Corporate Directors’ 2025 Trends and Priorities Survey captured directors’ views of the most significant trends in this dynamic environment. Respondents could select up to five trends, and the 10 most frequently selected were:

• Shifting economic conditions: 51%
• Regulatory requirements: 46%
• Cybersecurity threats: 41%
• Competition for talent: 37%
• Geopolitical volatility: 31%
• Artificial intelligence (AI): 30%
• Growing business model disruptions: 29%
• Inflation rate: 28%
• Technological change (other than AI): 27%
• Supply chain disruptions: 27%

What is driving hyper-volatility in the business world?

During conversations with global leaders during 2025, several broad themes emerged that contributed to the hyper-volatile environment.

• No “new normal”: The unprecedented disruption of the pandemic and numerous global conflicts in recent years have created societal and political volatility that has made establishing the “new normal,” expected in the wake of the pandemic, elusive. Consumer and labor markets, work arrangements, supply chains and other factors remain in flux
• More frequent and interconnected risks: Events once thought rare occur more often, at scales previously unseen, impacting business strategy and operations in complex and nonlinear ways that vary by country and sector. Business risks during 2025 included ongoing climate events (devastating fires, floods and severe weather), property peril, financial investment flows, gray-zone attacks, wars, shipping infrastructure, cyberattacks, disinformation campaigns, commodity prices, and employee and executive security threats
• AI and new tech: Generative AI, agentic AI, spatial and quantum computing, and other new technologies continue to surprise users and leaders in what they can and cannot do. AI development, for example, has experienced both advances and setbacks. These included:
  • An increasing number of AI applications performing below expectations
  • Use of technology that lags behind the most recent developments
  • Data, skills and deployment abilities that cannot keep pace with technology
  • New forms of regulation and lawsuits make governance difficult
• Policy changes: Country-specific policy shifts from the 2024 Biggest Election Year in History make mid- and long-term planning difficult. In countries around the world, pivots in rules and regulations, trade conditions and tariffs from new authorities have become the norm

4 strategies to manage hyper-volatility

In Managing hyper-volatility: Strategies to succeed in extreme climate and geopolitical uncertainty, WTW’s Ester Calavia Garsaball, Hélène Galy and Cameron Rye share a set of strategies effective leaders use to thrive in the face of hyper-volatility. These leaders make essential choices when addressing interconnected extreme risks, from building flexibility into their operations and talent to combining quantitative analytics with qualitative “storytelling” approaches to better identifying and managing risks.

They take four sets of actions that make them successful in the current environment:

1. Understand risk tolerance and maintain healthy cash reserves: Understanding and quantifying risk tolerance is crucial to building financial resilience in a hyper-volatile environment. Events such as economic shocks, geopolitical disruptions and climate-related incidents can trigger one-off, unbudgeted losses

   Effective leaders generally identify their organization’s risk tolerance, then maintain appropriate cash reserves to help withstand unexpected financial shocks and avoid insolvency or default. By setting just enough cash aside while considering the opportunity cost of doing so, effective leaders have the liquidity to continue operations and meet financial obligations even in the face of hyper-volatility

   For example, with ample cash reserves, organizations can quickly respond to a sudden increase in raw material costs without compromising financial stability. Effective leaders may model an array of scenarios to better assess the potential impact of severe, low-probability loss events on financial performance, as well as the reserves required to endure them

2. Build operational flexibility into revenue streams and supply chains: Effective leaders and boards often manage hyper-volatility by creating greater operational flexibility. Examples include:
   • Diversifying revenue streams to spread proceeds across multiple products, services and markets to reduce dependence on any single source and mitigate the impact of sudden market changes or disruptions
   • Building supply chain redundancy with multiple suppliers and alternative production methods, enabling them to switch to a backup plan more quickly than competitors if a primary supplier is compromised by a disruption
   • Digitalizing to enhance operational flexibility: For example, through cloud-based systems and remote work capabilities that can enable continued operations despite failure or destruction of physical infrastructure

3. Develop a flexible culture: Effective leaders and boards tend to promote organizational cultures that value adaptability and innovation, two attributes that are vital for building financial resilience against hyper-volatility. They know that when employees at all levels understand and prioritize the need to pivot and innovate, implementing and maintaining strategies that protect the company's financial health becomes easier

   Continuous training, clear communication of risk management goals and known incentives for identifying risks proactively can support meaningful culture. Effective leaders may offer workshops on scenario planning, problem solving and critical thinking that help their workforces better understand, plan for and respond to events

4. Stress test business models and assess financial impacts: Effective leaders frequently combine scenario testing, data and advanced analytics to create hypothetical scenarios that capture the cascading effects of multiple risks, such as natural catastrophe events or geopolitical tensions. They then can analyze how these scenarios impact supply chain and financial performance under an array of outcomes

   For example, they might consider the 2018 and 2023 wildfires in Hawaii, which had starkly different outcomes (the 2018 fire was contained with minimal damage, while stronger winds and the presence of non-native grass species exacerbated the 2023 fire, leading to significant losses)

   By testing scenarios that consider multiple and nuanced environmental and climate-related factors, effective leaders can better identify and address potential vulnerabilities. Quantifying the risks and showing the materiality of the potential losses also better positions the board to secure budgets necessary for appropriate resilience-building measures

Effective leaders practice continuous learning and adaptation in hyper-volatile environments. They reassess their risk management strategies regularly, use quantitative and qualitative methodologies and adjust as needed in real time.

A version of this article originally appeared on Forbes on October 17, 2025.

Author

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John M. Bremen

Managing Director and Chief Innovation & Acceleration Officer

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