The contemporary CEO must not only be expert at addressing the commercial verities of products, markets, and competitors. She must also have the  experience and capability to address business-in-society issues—legislation, regulation, investigation, enforcement and litigation — that now create risk and opportunity in all dimensions of corporate activity.

Recent global developments underscore the importance of these societal issues. The U.S. presidential election and the transition present a confusing (and confused) mix of pro-business and anti-business themes. On the one hand, protectionism, populism, and wide-spread distrust of business’s role in politics is threatening international corporations (think Carrier, Boeing, and tariffs/taxes for off-shoring and outsourcing). On the other, tax reform, infrastructure, deregulation, and the inclusion of more businesspeople in the Cabinet may create opportunities for them. Similarly, whether the Brexit vote last June will help or hurt businesses in the UK and EU is still uncertain.

But the U.S. election and Brexit are only the most recent examples of the pervasive, burgeoning importance to corporations of business-in-society issues. In virtually every country across the globe, a broad range of governmental and ethical issues directly and immediately shape what companies can and cannot do. They present an ever-changing, ever-expanding and often inconsistent array of rules and requests to promote economic growth and to protect workers, consumers, investors, communities and the public welfare.  And they may shift dramatically as the political pendulum swings back and forth in different nations.

Indeed, systematically dealing with the risks of anti-business/anti-globalization proposals and the opportunities of pro-growth policies has become as important for global corporations as addressing product, market, and financial issues.

The challenges of business-in-society issues arise in many different settings. These include legislation, regulation, investigation, enforcement, litigation, ethics, reputation, crisis management, corporate citizenship, and pressures from public officials, NGOs, and the media. In a globalized economy, these challenges arise from pervasive, at times catastrophic, issues in international business: cronyism, antitrust, and labor issues, as well as trade, the environment, taxes, and supply chains.  They stem in confusing and challenging forms from significant geopolitical developments: e.g. populism, nativism and protectionism in the U.S. and EU; Russian resurgence in Eastern Europe; Chinese assertiveness in Southeast Asia; massive corruption in Brazil; and ongoing tribal hatreds and religious conflict in the Middle East. They involve confronting major, recurring global issues that threaten the health of capitalism: e.g. terror, cyberwarfare, pandemics, corruption, inequality, migration, and aging.

CEO acumen on business-in-society issues is thus imperative in addressing fundamental corporate issues, from business strategy to compliance to ethical standards to risk management.

For example, in setting strategy at a large multinational, the CEO has to navigate among different politico-economic systems that range from state capitalism to government-centric industrial policy nations to market-centric mixed economies. This, in turn, involves sorting out different ideologies in those systems about how government should function: from the libertarian to the conservative to the populist to the liberal to the socialist.  To assure legal compliance and mitigate legal hazard, , the CEO and top staff must confront complex, conflicting, and uncertain rules, enforcement practices, and legal cultures across myriad regional, national, and subnational jurisdictions.  The CEO may also want  voluntarily to set global ethical standards beyond what the law requires, in part to forestall additional regulation. Setting such standards involves nuanced balancing of the interests of the corporation and the rights of—and duties to—stakeholders. These ethical questions arise in the whole range of corporate activity from technology and manufacturing to marketing and sales. Or, to take a final example, the CEO’s ability to mitigate risk involves identifying, understanding, and prioritizing the diverse economic and noneconomic threats to the corporation, especially those that present difficult geopolitical, terrorist, or cyber threats. The CEO must then set up robust, cross-functional systems and processes to prevent, mitigate, and respond to those risks, always mindful of the stark challenges in diverse national cultures where the company operates.

The board of directors has an important role in assuring that the CEO brings vital business-in-society perspectives to her job.  It needs to change the critical selection process by assuring that leadership development includes major experience on broad integrity, risk, and public issues—and then choosing a CEO with the requisite breadth and commitment. It needs to focus its oversight function by clearly defining the core operating objectives for the 15 highest priority risks and opportunities that include business and society issues. It needs to tie both cash and equity compensation to the detailed record on those objectives (not just the general movement of the stock market). And it needs to establish robust Risk and Public Responsibility Committees for more complete reviews of this broader set of problems.  The board also needs to ensure that the executives reporting to the CEO are also broad-gauged people who are not just expert in business but have deep understanding of politics, policy, ethics, societal trends, country risk, modern communication, and corporate citizenship.  A salient example is the inside counsel revolution of the past 20 years. In most major U.S. companies, the General Counsel is now a core member of top management — asking not just “is an action legal” but, ultimately, “is it right. ” The GC now has importance and stature comparable to the Chief Financial Officer because the health of the corporation requires that it navigate complex and fast-changing demands from legislators, regulators, investigators, enforcers, and interest group critics across the globe.

The importance of business-in-society issues is reflected, ultimately, in the fundamental mission of the global enterprise: the fusion of high performance with high integrity and sound risk management.

This is the essence of corporate citizenship. It should include CEO leadership on substantive public policy that secures, in a broad and balanced way, public goods that the market cannot create — and that avoids narrowly self-interested crony capitalism (the cause of much public antipathy). It also entails following political processes that address the dysfunction in our political culture: through restraint on money, fairness in facts, balance in solutions, nonpartisanship in politics, and coalitions broader than narrow business associations.

Accomplishing this performance with integrity mission hinges on integrating business-in-the-economy and business-in-society perspectives. Failing to do so can lead to severe corporate damage, as the performance and integrity scandals of this century demonstrate – think of Enron, Worldcom, Siemens, BP, VW, and Wells Fargo, to name only a few of the possible examples.

But succeeding at this mission can achieve more than avoiding catastrophe. It also creates value and benefits in the corporation, in the marketplace, and in the broader world community — and ultimately creates the basic trust which is the foundation for corporate durability and sustainability and which endures beyond changes in governments.