Leadership among volatility: How firms respond to structural disruption

When the rules of the global economy keep changing, and no one agrees on the direction ahead, leadership becomes less about predicting the future and more about adapting to it. As markets shift amid deficit cuts, trade tensions, and geopolitical shocks, this article examines how business leaders are rethinking strategy, decision-making, and institutional trust to stay resilient in a fractured landscape. 

Rewriting the global playbook

According to Rob Kaplan, vice chairman of Goldman Sachs, five major structural forces are reshaping the U.S. economy in 2025 and are redefining how firms make decisions, allocate capital, and manage risk. These are federal budget deficit reduction, productivity-focused regulatory reform, expansion of domestic energy supply, changes to immigration policy, and broad-based tariffs. 

“The [current] administration is trying to address what they see as an over-leveraged U.S. government. Debt-to-GDP has gone from the mid-70s pre-Covid to over 100%,” Kaplan says. “They’ve come in aiming to deleverage, to reduce deficits from 6.5%–7% of GDP.” 

He emphasizes the challenge of multiple disruptions occurring at once. “It’s a lot for any moment in time,” he said. “This level of institutional uncertainty is affecting asset allocation and capital access in the U.S.” 

Dollar exposure and business confidence 

Amid heightened volatility, global investors are rethinking their exposure to U.S. assets. The shift reflects growing concern over U.S. f iscal and trade policy and the broader stability of American institutions. “[Investors] came into the year thinking, ‘If in doubt, over-allocate to the dollar,’” Kaplan says. “Now they’re saying, ‘Maybe I need more balance, maybe even reduce my dollar exposure.’” 

This recalibration isn’t just about currency, it signals eroding confidence in U.S. economic governance. Ad hoc trade policies are replacing longer-term strategies, leaving firms without a clear framework. 

Policy uncertainty is weighing especially heavily on small and mid-sized firms, which lack the resources of larger players. Many are postponing investments or scaling back operations due to competitiveness concerns. 

One major source of anxiety is the unclear path of trade policy. “We’ve applied tariffs to everyone,” Kaplan says. “Now we’re negotiating one-off deals, but it takes time. Companies don’t know what the endgame or timing is and that’s why they’re stuck.” 

The decline in business and investor confidence has moved beyond economic concerns: it’s now an institutional issue, according to Kaplan. “Countries and investors around the world are asking: What is the institutional makeup of the U.S.? What will it be in three or four years?” Kaplan said. 

Fed’s challenge and new leadership expectations 

As of 2025, central banks have limited room to maneuver. Inflation remains persistent in services, tariff-driven cost pressures are emerging, and political tensions complicate monetary policy. 

The Federal Reserve’s challenge isn’t just balancing inflation and growth, it’s managing uncertainty without fueling it. Markets now look to the Fed not for precision, but for stability. As Kaplan puts it: “They’re not going to be prognosticators; they’re going to be risk managers.” 

The risks are twofold: overreacting to noisy data or losing control of inflation expectations. Fed Chair Jerome Powell is walking a tightrope. “He needs to anchor inflation expectations,” Kaplan says. “You don’t want them to get away from you. The last thing the Fed wants to signal is that it’s easing up on inflation.” 

This cautious posture is echoed in corporate boardrooms. Strategic decisions are being deferred as visibility around supply chains, labor, and demand continues to shift. The post-Covid playbook: reshoring, digitization, and demand normalization, is being rewritten in real time. “Companies are struggling to figure out how to adjust their supply chains, operations, workforce,” Kaplan says. 

Leadership models are evolving in response. Executives are no longer judged on predictive accuracy but on adaptability and the ability to convey calm under pressure. Government actions such as tariffs, deficits, regulatory appointments are tracked as closely as earnings or rates. 

Financial institutions, too, are being redefined. Value now comes from a firm’s ability to deliver integrated support, not just individual expertise. “Clients don’t want to hire a person,” Kaplan says. “They want to hire a firm, and know the team brings the full institution with them.” 

Stefan Simon, former Americas CEO of Deutsche Bank, offers a similar perspective. “Clients need to know that you’re in it for the long haul,” he says. “That you understand their challenges and that you can deliver consistently.” 

Europe recalibrates its approach

While these challenges dominate the U.S. landscape, European institutions are also shifting. Rising volatility and client demand for diversification are prompting a strategic rethink. 

Simon notes that clients increasingly want a mix of U.S. and European financial partners. “We work with the large U.S. banks,” clients say, “but we want one or two European banks in the stack.” This trend has accelerated in Q2 of 2025, according to Simon. 

European policymakers are responding by investing in strategic independence in areas such as infrastructure, defense, and industrial competitiveness. 

“We are still far behind the US and the UK,” says Simon. “But I think there is a growing understanding that we need to catch up, and that the equity culture is vital for funding growth and innovation.“ 

He adds that the political wake-up call came in the last three months. “We need to boost competitiveness, invest in infrastructure and defense, and stand more on our own feet.“

Yet even as European institutions expand their role to meet rising client expectations, they remain constrained by structural and regulatory complexity. 

“In Europe, we are simply over-engineered,” says Simon. “The regulator wants us to be better capitalized, more robust, more diversified. It’s all well intended but it is also overdone. And that hurts our competitiveness. 

“Sometimes it feels like we are competing with one hand tied behind our back. The regulatory environment is too fragmented and too complex.” 

Leadership without visibility

The structural forces reshaping global finance, from fiscal retrenchment to geopolitical decoupling, are testing traditional leadership models. Institutions are being asked to deliver performance without predictability and provide service without certainty. 

Across the Atlantic, a shared theme is emerging: the role of leadership is not to forecast the future, but to ensure that teams and systems continue to function when visibility is low. Uncertainty is no longer the exception; it is now the baseline. 

Firms that thrive will be those that embrace flexibility, resilience, and rapid communication. They will build internal cultures that support decision-making under ambiguity and inspire client confidence even in volatile markets. 

As Kaplan noted, “Businesspeople adapt. Capital allocators adapt.” In 2025, success will belong to those who can execute under pressure, make grounded decisions, and lead with confidence through uncertainty. 

Looking for sell-side solutions to navigate market volatility? Click here. 

Insights in this article are based on panel and fireside discussions at the Bloomberg Sell-Side Leaders Forum held in New York in April, 2025.