This post is based on a Wachtell, Lipton, Rosen & Katz memorandum by Martin Lipton, Karessa Cain, Sarah Eddy, Kevin Schwartz, Lina Tetelbaum, David Adlerstein, and Anna D’Ginto.

I. INTRODUCTION

Overview

Public companies and their boards of directors face an increasingly complex array of risks that test the resilience of corporate values, strategies, operations, and enterprise risk management frameworks. Tighter monetary policies, deepening geopolitical tensions, widening domestic political polarization, labor shortages, severe weather events, growing challenges tied to nature and biodiversity loss, and the uncertainties surrounding generative AI are among the varied risks that companies have had to contend with in recent years.

These risks are likely to persist and even intensify—against the backdrop of unpredictable trade and foreign policy, ongoing conflict in Ukraine and the Middle East, and China’s sluggish post-pandemic recovery. Severe wildfires, heatwaves and flooding across the globe, rising insurance costs, and the exodus of insurers from large pockets of the country underscore the burgeoning financial risks and challenges of climate risks. Cybersecurity risk continues to increase in scale and scope while the geopolitical rivalry between China and the United States remains unabated. According to the World Economic Forum’s Global Risks Report 2025, the majority of the business leaders polled anticipate some instability and a moderate risk of global catastrophes, while another 31% expect even more turbulent conditions over the next two years.

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