Source: Fortune
Summary
Corporate leaders must recognize that energy risk is no longer just a problem for governments to solve, but a critical business issue that can impact the entire economy. The Strait of Hormuz crisis highlights the need for companies to manage energy security as a strategic risk, similar to cyber risk. Executives must stress-test their businesses for energy price shocks and build buffers to mitigate disruption. This includes identifying critical vulnerabilities, finding alternate sources, and establishing backup power generation.
Our Reading
The strategy enters a familiar phase.
Companies are treating energy risk as a public policy issue, not a business issue. Energy shocks can quickly percolate through the economy, impacting everything from freight to food. Boards and CEOs must stress-test their businesses for energy price shocks. The goal is to provide enough of a cushion so a temporary shock doesn’t become a business crisis. Efficiency may work in a stable world, but falls apart in an unstable one. Outperformance will come from the ability to keep operating when markets turn volatile. Companies must blur the line between state strategy and corporate strategy to ensure national resilience.
Company survival and national resilience are tightly linked.
Author: Evan Null
