Geopolitics: Why European CFOs Are Pivoting to AI

The precedent: Shell, 1973, and the birth of scenario planning

In 1973, Royal Dutch Shell had a tool its competitors ignored. Pierre Wack, who led the planning group, had built alternative scenarios for the price of crude. The mechanism was simple: imagine the improbable, price it, prepare for it.

When OPEC declared the embargo in October 1973, the price of a barrel quadrupled in a matter of months. Rival majors reacted in panic. Shell already had its maps ready, and rose from seventh to second place worldwide in profitability by the end of the decade.

The precedent teaches a precise rule. Scenario planning beats linear planning when variance explodes. The reason is structural. A scenario already written eliminates reaction time: the decision is ready before the event arrives. Those who work by linear extrapolation, instead, must first recognize the break, then rebuild the model, then decide. Each step costs weeks, and weeks cost market share.

Today the same mechanism is active again. The context is different, the structure is identical. Geopolitics now drives the budget cycle of European CFOs, who face volatility that is hard to absorb with annual models.

The difference from 1973 lies in the tool. Back then it took analysts and paper. Now it takes computing power, and that shifts the advantage toward those who control data in real time. The advantage, however, remains the same: compressing the distance between the shock and the response.

The current pattern: treasurers rewrite the budget cycle

Since 2024, one signal recurs across industry research. The J.P. Morgan EMEA Treasurers Forum survey shows that more than half of treasurers name geopolitical tensions as the primary barrier to long-term planning, ahead of inflation and rates.

The Deloitte data reinforces the picture. The share of European CFOs less optimistic about corporate results than three months earlier has nearly doubled, from 25% to 48%, in a sample of more than 1,100 finance leaders across 12 countries, as documented by IT Brief.

Many finance teams are abandoning fixed budget cycles. They adopt continuous scenario planning, which consumes resources and diverts attention from long-term strategy. The cost is concrete. Every revision commits hours of analysis that produce no strategy, only updates. The risk, for the reader running a treasury, is mistaking constant motion for control.

Here is the structural reading. Geopolitical risk stops being a tail risk. It becomes the primary constraint on financial decision-making.

The mechanism: why volatility rewards agility

Why does geopolitical fragmentation reward agility? The mechanism is one of frequency, of reaction speed.

A monthly close cycle assumes the context stays stable for thirty days. That assumption collapses when energy shocks, sanctions and trade realignments arrive on a weekly cadence.

Aidana Zhakupbekova, COFO of Rydoo, describes the dynamic clearly. Finance teams lose the ability to wait for the close of a month or a quarter to redo the analysis from scratch, and the decision must become more agile.

This is where AI enters. AI-based tools offer real-time visibility on spending, update budgets and forecasts, detect fraud. Adoption centers on productivity and forecasting accuracy, far from experimental use cases.

The structural point is this. AI becomes risk-management infrastructure, a direct response to fragmentation. The technology bridges the gap between the frequency of shocks and the frequency of decisions. One limit holds, however. The tool shortens reaction time; it does not eliminate uncertainty about the event. A faster forecasting model remains a prisoner of the data it receives: if the shock is of a new nature, speed helps you respond, not predict.

My position, and what would disprove it

Here is my position. European political fragmentation in 2026-2030 remains systematically underpriced by markets and boards.

Political risk models use historical variance. That method works in a stable regime. We are in a different regime.

This changes the nature of the problem. Three significant electoral realignments will arrive before 2028 in core EU countries. Boards will price them when they are certain. I price them when the pattern is identifiable, and the other macro analyses follow this logic on the Agora blog.

The defensive adoption of AI in treasuries confirms the thesis on the micro side. Companies feel the frequency of shocks before macro models register it.

What would change my reading? A return of fixed budget cycles as standard, accompanied by a structural decline in the share of CFOs citing geopolitics as the primary constraint. That signal would disprove the thesis. For now the data points in the opposite direction.

Three implications for capital

For the family office and sovereign funds. Reallocating toward assets resilient to fragmentation makes sense over the next 36 months. Infrastructure, energy, defense and liquidity in currencies other than the dollar gain relative weight.

For the CEO and the board. Geopolitical risk already belongs on the income statement, through energy costs and margins. A strategic plan that treats this factor as an exogenous variable arrives late.

For the chief risk officer. The scenario of recurring energy shocks on a weekly cadence deserves an explicit place in VAR models, because historical variance understates this frequency.

For the CFO and investor relations. The narrative of stable margins holds up poorly at eighteen months. Pricing margin compression into guidance protects credibility.

Each implication has a different horizon. Portfolio reallocation works on 36 months, the VAR revision on 12, investor guidance on the next quarter.

The forecast

By the fourth quarter of 2027, the share of European CFOs naming geopolitical risk as the primary strategic constraint will exceed 60% in the Deloitte and J.P. Morgan surveys.

The mechanism supporting this estimate is cumulative. Each energy shock and each trade realignment reinforces the habit of scenario planning, and consolidates the perception of risk as a permanent structure. Once a team adopts continuous planning, the return to an annual budget becomes rare. The habit settles in, and with it the reading of risk.

Confidence: Medium. Horizon: fourth quarter 2027. Verification: the next Deloitte European CFO Survey and the J.P. Morgan EMEA Treasurers Forum research.

The signal that would disprove the thesis is precise. A decline in the share below 45% in either survey by the end of 2027 would close this forecast as wrong.

What to watch

Three leading indicators will confirm or disprove the thesis over the coming quarters.

The first. The percentage of European companies replacing the annual budget with continuous planning. Steady growth confirms the regime shift.

The second. Spending on AI-based treasury software. Acceleration signals that risk is entering fixed capital, beyond the tactical response.

The third. The dispersion of energy-cost forecasts in quarterly reports. Growing dispersion measures the frequency of shocks better than any sentiment index.

This is the pattern. These are the precedents. This is where it leads.