Two years ago, the makings of a new world order emerged. Brexit was followed by the 2016 U.S. presidential election and a foreign policy strategy that put “America First.” Since then, news headlines have prominently featured threats of import tariffs, renegotiated trade agreements, anti-immigrant rhetoric, and growing tensions in North Korea and the Middle East.

Dalynn Hoch, CFO, Zurich N.A.

Today, the United States rests under a cloud of geopolitical upheaval that has the potential to shape the global economy for decades. In the midst of this volatility, what do CFOs around the world think about investing in the United States? The answer might surprise you: America remains open for business.

Nearly 500 corporate CFOs from 30 countries responded to a recent survey about growing protectionist views in the United States and how these views might alter the investment landscape here. The survey — included in a report released on Thursday, “Borders vs. Barriers,” a collaborative effort by Zurich Insurance, EY, and the Atlantic Council — found that 61% of the 497 participants felt confident or extremely confident investing in the United States.

Additionally, 71% of the CFOs said they expect continued improvement in the next three years. Those in North America were even more bullish, with 75% expecting such improvement.

There are good reasons for the optimism among CFOs: 10 years of steady economic growth, record low unemployment, and a recently enacted tax reform bill that is expected to drive growth and fuel the economic engine, for starters.

There is also cause for concern, however.

Most of the surveyed CFOs expected more U.S. protectionism, increased U.S. scrutiny of cross-border mergers and acquisitions, and more restrictive U.S. immigration policies — all of which could negatively influence investment in the United States.

The challenge for CFOs and their organizations in this environment will be to take advantage of the opportunities presented by the rosy short-term economic outlook while also keeping an eye on geopolitical storm clouds gathering on the horizon.

“Borders vs. Barriers” provides a forecast of the coming storm through three potential scenarios: Isolationism, Atlanticism, and Internationalism. These scenarios are defined as follows:

• Isolationism: When a country voluntarily abstains from security- or economic-related politics in an area where it can exert control or significant influence globally.
• Atlanticism: Based on the idea that countries that border the Atlantic Ocean share a similar identity or have interests that overlap significantly, emphasizing cooperation and the exchange of ideas, trade, and movement of people among these countries.
• Internationalism: The pursuit of an open and rules-based world order centered on institutionalized cooperation among democracies. It acknowledges a diverse array of global interdependencies that must be managed to sustain peace and economic well-being.

The report also lays out the potential impact of these scenarios on four broad areas of importance to companies: overall U.S. policy; supply chain; investment behavior; and reputation. These categories were determined to have the most impact on a company operating in the United States if trade policy changes.

The isolationism scenario presents the greatest potential for negative impact on U.S. investment. For example, an increase in tariffs on foreign-made goods could precipitate trade wars and lead to lost jobs and inflation in the United States.

Additionally, as domestic manufacturers are forced to concentrate in only a few geographic regions to maximize scale benefits and access to supplier networks, it could create greater risk from disruptive events such as transport problems or natural catastrophes.

The internationalism scenario, by contrast, presents a much more positive outlook with continued economic expansion and robust foreign trade.

But neither optimism nor gloom is an adequate lens through which to view the unknown of the future business environment in the United States. As CFOs responsible for overseeing and managing our organizations’ finances, we cannot be so shortsighted. The reality is that changes in the United States’ level of global economic engagement will have a direct impact on gross domestic product and unemployment, both key drivers of the country’s economic health.

Organizations have a choice to make: manage geopolitics or be managed by them. To that end, they can take action, be proactive, and implement a “geostrategy” — a disciplined, integrated, and holistic approach to assessing the impact of external factors on a company’s strategy and operations.

By implementing a geostrategy that addresses the potential risks identified in all three scenarios, boards, management teams, and risk managers can be prepared to protect their operations from potential harm and take advantage of new opportunities that emerge as a result of this disruption.

Dalynn Hoch is CFO of Zurich North America.