Emerging Governance Safeguards Against US Political Risk

Corporate boards and institutional investors have long embedded political risk analysis into governance and stewardship frameworks. But most have focused mitigation strategies on jurisdictions outside the US while considering political risk to be close to nil in America. That approach changed following the January 6, 2021 insurrection at the Capitol, when many executives and shareholders began to confront the prospect that macro political risk in the US—for instance, social unrest in the wake of partisan mayhem—could trigger threats to enterprise and market sustainability.

Today, political stressors in the US have metastasized into a new and unprecedented micro-level phenomenon: the president himself has intervened at specific companies in board decisions over share buybacks, hiring practices, corporate mergers, foreign investment, and other matters. Previously, regulators and courts had ring-fenced such responsibilities from shareholder oversight based on the business judgement rule. Under it, boards could claim a safe harbor protection from outsider second-guessing if directors were making ordinary corporate decisions. Now the US president is asserting the right to such second guessing—and wielding threats if boards don’t yield. Worse, observers have found it difficult to predict or rationalize which corporate targets might be singled out, and when, or how, for presidential intervention. In addition, the president is engaged in an assault on the independence of the Federal Reserve, a body both companies and investors have relied on as a backstop to political impulsiveness. All this is unfolding while macro political risks—for instance, lethal Trump administration anti-immigrant raids in Minnesota sparking social unrest—remain at sharply elevated levels.

At the same time, though, the Trump administration is offering deregulation measures sought by certain corporations. And the president’s appointees are pushing the US Department of Labor and the Securities and Exchange Commission toward far-reaching curbs on shareholder influence and proxy advisors, items long on the policy agenda wish list of some public companies.

In sum, the current political ecosystem presents volatility and highly idiosyncratic dangers and opportunities to different market parties. Companies could once assume relative stability in the public policy decision-making process, and to manage it accordingly. Now that system has been replaced by apparent unpredictability. Market leaders, as a consequence, are demonstrating an urgent need of governance and stewardship mitigation responses that are innovative and effective. And as markets are wont to do, resources are now quietly emerging to equip corporate boards and institutional investors with toolkits they need to pursue resilience against aberrant political risk.

First, let’s see a snapshot of what current political risk in the US actually looks like. When ExxonMobil CEO Darren Woods described Venezuela as “uninvestable” during a White House meeting in January 2026, President Trump retorted later “I didn’t like Exxon’s response, I’ll probably be inclined to keep Exxon out. I didn’t like their response. They’re playing too cute.” Also in January, Trump declared without warning that Raytheon could “under no circumstances” continue stock buybacks while producing weapons for the US military. In 2025 Trump warned that the Federal Communications Commission could revoke ABC’s broadcast license for reinstalling Jimmy Kimmel as a late-night TV host. He filed a massive lawsuit against CBS and parent Paramount Global claiming coverage bias, with the implicit threat that regulators could scupper its merger with Skydance Media if CBS failed to alter its editorial direction. And Trump targeted Disney for engaging in promotion of diversity, equity, and engagement initiatives.

Disney, in fact, is an example of how political risk to corporations has proliferated beyond the White House to state level. Florida Governor Ron DeSantis launched a furious legislative assault on the company when it took the decision to oppose his Parental Rights in Education Act. But institutional investors, not just companies, have emerged as targets of local-based public sector risk. Blackrock, Vanguard, and State Street—the largest US asset managers—have been singled out by elected officials in Texas, Florida, and other states, for boycotts, public pressure, and lawsuits over the three firms’ alleged imposition of “social engineering” on investments. The same trio face pressure on similar fronts from federal agencies.

The result: companies and investing institutions are approaching each day as if walking on eggshells. On the one hand, they worry about unanticipated potential hits from the president, the administration, state-level officials, or from the eruption of sudden reputation crises arising from clients, and media. On the other, a subset girds to welcome long-sought policy gifts from Washington.

How can boards adapt? Directors and their companies recognize that they require analytical and response skills allowing them to navigate the mix of carrots and sticks, seemingly unpredictable business risks, and deregulation opportunities arising from politics. Of course, this is hardly a new task for private enterprise: Directors operating in markets accustomed to high public policy risk have long practice in surfing political volatility. But it is relatively new in the US, where customs of political influence were generally practiced according to established and predictable convention. Now market players need analytics tailored to the times.

One resource is the forthcoming book Trump’s Ten Commandments: Strategic Lessons from the Trump Leadership Toolbox, by Yale School of Management Prof. Jeffrey Sonnenfeld, with Steven Tian. It addresses the challenge of Public Affairs Governance by offering a forensic diagnosis of President Trump’s “rules of thumb for navigating just about any and every situation.” In doing so, the authors hope to help market actors decode Trump behavior so that they treat it not as erratic, but rather as a set of strategems that can be understood, modeled, and planned for. This is not a book for the political ages. Instead, it is shaped precisely to this moment given the singular idiosyncratic relevance of this president’s personality to the conduct of his administration.

For instance, Sonnenfeld and Tian contend that Trump’s approach to negotiations and deal-making (#2 in their “Trump’s Ten Commandments”) diverges radically from common practice. His modus vivendi is to “start with a punch in the face” rather than an effort to build trust. It is a method designed to throw the target “off course before negotiations even really begin”. Authors caution that “if you lose your balance or composure, you’ve lost the negotiation already.” Similarly, Trump typically deploys a “perpetual noise machine” of distraction (#6). Targets should, in Sonnenfeld’s and Tian’s view, “stay relentlessly focused” on their own objectives “no matter how many diversions are tossed out.” The analysis argues that companies and investors subject to attack can gain enough insight into Trump behavior to remain calm, analytical, and strategic in their responses.

Another vital resource for piloting political risk is the new nonpartisan think tank Third Side Strategies and its CPR Hub, with practical tools for handling Corporate Political Responsibility as well as Democracy-Aligned Investing.[1] Third Side advises enterprises to start by undertaking an internal public affairs governance review to gain insight into the entity’s exposure to public sector risk as well as its current approaches to public affairs engagement. Last October it published Principled Influence: A Guide to Strengthening Public Affairs Practices in Polarized Environments, which includes step-by-step advice on such internal reviews, from who should be involved, to what should be assessed, to what scenarios need proactive planning, to building capacity for response and risk mitigation. The Leadership Now Project, an American business-membership non-profit, published a related Corporate Guide to Managing US Political Risk in advance of the 2024 presidential election.

Third Side also spotlights lessons from other jurisdictions, where enterprises have faced down public sector challenges. For instance, in a January 2026 paper, Dr. Benedikt D. S. Kapteina of Dresden University of Technology outlined how firms in east Germany were compelled to address deleterious business effects from political polarization. Firms “have begun to stabilize the democratic environment they depend on. Companies offer media literacy workshops for apprentices and employees, explaining how to recognize manipulated content and where to find reliable public information. Others organize non-partisan election appeals that emphasize participation. Many firms have created moderated dialogue sessions in which employees can discuss contentious issues constructively. Some also host neutral discussion panels with political candidates, giving employees the opportunity to ask questions about issues, institutional processes and policy implementation without endorsing specific positions. Executives increasingly speak out when extremist rhetoric threatens employee safety or company reputation. These activities focus on democratic competence rather than party preference.”

The US political ecosystem has distinctive features compared to democracies elsewhere in the world, but American companies have found one strategy in common with other jurisdictions when seeking to mitigate an outbreak of political risk: where possible, act together. This is what transpired in Minnesota in the wake of twin January 2026 killings by federal ICE agents. More than 60 leading executives from the state’s largest companies, hospital systems, and sports teams released a joint letter publicly backed by the Minnesota Chamber of Commerce and, later, the CEO of the US Business Roundtable. While steering clear of partisanship, the signers called for “immediate de-escalation of tensions”, an indirect but clear repudiation of ICE tactics. The executives appear to have been prompted by a sharp spike in employee and public unrest, which posed material consequences of heightened political risk. “The larger issue for C.E.O.s,” former Medtronic CEO Bill George told The New York Times, is that the unrest in Minneapolis “is going to have a very negative effect on their growth, on their innovation and particularly their ability to recruit people from around the country and around the world.” So they banded together in a response, avoiding the prospect of any one firm being singled out for taking a stand on ICE.

Sonnenfeld and Tian’s book makes exactly that case: that collective action can be an antidote to Trump’s default approach (commandment #3) of divide and rule. It is for that reason, they contend, that the president dislikes the Business Roundtable, which encourages corporate collaboration. When companies work together, Sonnenfeld has asserted, “they have immunity”.

He may be correct when it comes to a civic-wide risk, such as the one that arose in January 2026 in Minneapolis, or in January 2021, in Washington, DC, in the wake of the insurrection, when many companies combined in calling for a restoration of electoral order. Collective action is far more difficult to generate when the White House intervenes to sway board decisions at a specific company. The challenge is that US CEOs are not accustomed to rallying behind each other, especially when commercial rivals are involved.

That is where the market’s emerging governance resources will be most severely tested. To expand safeguards against political risk, to help market actors achieve a measure of “immunity”, the new toolkits must help companies and institutional investors develop and flex muscles of mutual aid. After all, a traditional weighing of costs and benefits to an individual enterprise might argue against moving to help another firm in the crosshairs. But as observers above have noted, the singular nature of political risk at this moment calls for boards to embrace a new calculus of costs and benefits that incorporates dangers to the very health of the overall US capital market. Those can emperil everyone.