Governance in the Age of Uncertainty: Lessons from Crises, Trade Wars and Corporate Failures

Uncertainty in business is like sailing through dense fog on an unfamiliar sea. The water looks calm, but hidden reefs can tear through a vessel at any moment. The storms of recent years — from the COVID-19 pandemic to US import tariffs and ongoing geopolitical tensions — have shown that even the most sophisticated organisations can lose their way.

Governance, in this metaphor, is both the compass and the rudder. Hard controls — reporting lines, audits, financial stress testing — form the steel of the ship. Soft controls — culture, leadership, trust — provide the sails that catch the wind. When one element is weak, the ship drifts or capsizes. This article explores how organisations have fared when confronted with turbulence, and what lessons can be drawn for governance in practice.

The Landscape of Uncertainty

Modern corporations no longer operate in predictable waters. Three currents stand out:

COVID-19: The pandemic fractured supply chains, left factories idle and reshaped consumer behaviour overnight. Even companies with strong balance sheets faltered when suppliers could not deliver.
US Import Taxes: Trade policies introduced in recent years disrupted established supply routes. For European exporters, tariffs acted like sudden storms — not fatal alone, but destabilising for vessels already heavy with risk.
General Instability: Inflation spikes, war in Ukraine, and political volatility add to a pervasive climate of unease. Organisations that thrive in calm waters often perform poorly in stormy seas.

The common denominator is that uncertainty multiplies weaknesses. Businesses with shallow governance structures, brittle cultures, or short-term focus found themselves exposed.

Governance as Anchor and Sail

Governance is often framed as compliance — a checklist of duties to satisfy regulators. But in times of uncertainty, governance becomes an active discipline. It is not just about keeping the ship legal; it is about keeping it afloat.

Hard Controls: These are the tangible structures — audit committees, risk registers, compliance frameworks, segregation of duties. They are necessary to ensure accountability, but by themselves they resemble a rigid hull: strong, yet inflexible.
Soft Controls: Culture, leadership tone, open communication and psychological safety. These are less visible but determine whether employees raise concerns, whether weak signals are noticed, and whether a crisis is confronted early.

The bridge metaphor is useful here. Hard controls are the concrete pillars; soft controls are the tension cables. Remove either, and the bridge collapses.

Lessons from the UK

Carillion: A House Built on Sand

Carillion’s collapse in 2018 revealed a governance structure that looked solid but lacked depth. Financial reporting was optimistic, oversight was passive, and cultural signals encouraged over-promising. Hard controls existed on paper, but soft controls — integrity, open challenge, realistic forecasting — were absent. The result was a sudden implosion, leaving thousands unemployed and taxpayers exposed.

Learning point: Oversight without culture is brittle. Governance requires scepticism and courage, not only formal committees. Read also our blog on COSO – the Control environment.

Tesco: Pressure over Principles

Tesco’s 2014 accounting scandal, where profits were overstated by hundreds of millions, stemmed from a culture of pressure. Staff felt compelled to “make the numbers” regardless of substance. Here, soft controls failed; the formal reporting system was strong, but the tone at the top undermined accuracy.

Learning point: Hard systems cannot compensate for cultural shortcuts. Governance must safeguard honesty under pressure.

The Post Office Horizon Scandal

Perhaps the starkest UK governance failure is the Post Office Horizon case. Hundreds of sub-postmasters were falsely accused due to flaws in IT systems. Governance failed at every level: the board trusted the technology without listening to victims, regulators were slow, and whistle-blowers were ignored. Read about the COSO Integrity guidance that has become the word’s most used Corporate Governance Framework.

Learning point: Governance is not only about rules but about listening governance. Systems must include feedback loops to capture weak signals.

Success Story: Unilever

Not all UK stories are bleak. Unilever navigated COVID-19 supply disruptions with relative resilience. Its governance model, long anchored in stakeholder engagement and sustainability, provided agility. By balancing hard reporting with a strong culture of responsibility, Unilever maintained trust and operational continuity.

Lessons from the US

Boeing 737 MAX: When Pressure Overrides Prudence

Corporate lessons from uncertain times — Courtesy Boeing

The Boeing 737 MAX crisis is a textbook case of governance distortion. Commercial pressure to compete with Airbus led to compromises in design and testing. Soft controls — engineers’ concerns, culture of safety — were muted by shareholder urgency. Hard controls were present but circumvented.

Learning point: Governance that prioritises speed over safety is a compass pointing south.

Enron: The Eternal Metaphor

Though two decades old, Enron remains a metaphor for governance decay. Hard controls were bypassed with complexity; soft controls were poisoned by greed. The company’s glittering image masked a hollow core.

Learning point: Governance without transparency is like a lighthouse switched off during a storm.

Trade Tariff Shocks: Apple’s Adaptation

The US–China trade tensions forced firms to rethink supply chains. Apple responded by diversifying production into Vietnam and India. Governance here meant anticipating risk and steering early, rather than waiting for impact.

Learning point: Proactive governance is not reactive compliance, but strategic foresight.

Johnson & Johnson: Tylenol Crisis

A contrasting success comes from the 1980s Tylenol crisis, where J&J withdrew products nationwide after tampering incidents. Transparency, consumer safety, and decisive action defined its governance response.

Learning point: Soft controls — values and ethics — can transform crisis into long-term trust.

Also read our blog on Sarabanes-Oxley and the approach to Internal Controls in the US.

Lessons from the EU

Wirecard: A Failure Despite Regulation

Germany’s Wirecard scandal highlighted that regulation alone is insufficient. Supervisory bodies hesitated, whistle-blowers were sidelined, and cultural denial reigned.

Learning point: Governance requires active courage, not passive compliance.

Volkswagen Dieselgate: Culture of Denial

Volkswagen’s emissions scandal stemmed from a culture that valued market dominance over honesty. Engineers were aware of the deception, but governance mechanisms failed to challenge leadership.

Learning point: Hard controls can be engineered around when culture rewards silence.

Positive Examples: Philips and ASML

During COVID-19, Dutch companies Philips and ASML demonstrated governance resilience. Philips repurposed capacity to produce ventilators, while ASML maintained supply through cooperative European networks. Both cases show governance as collaboration, foresight, and cultural adaptability.

The Metaphors of Governance

The Bridge: Hard controls are the pillars; soft controls the cables. Remove either, and collapse is inevitable.
The Orchestra: Rules are the notes; culture is the conductor. Without harmony, the performance becomes noise.
The Lighthouse: Governance illuminates safe passage, but only if leaders look up from their immediate tasks.
The Storm: Crises are inevitable. Governance does not prevent storms but ensures the vessel is seaworthy.

These metaphors remind us that governance must be understood not only in structures but in spirit.

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Practical Guidance for Organisations

Integrate Financial Risk Signals: Use objective financial data to flag vulnerable suppliers before disruption.
Run “What If” Drills: Scenario analysis prepares organisations for shocks, from tariffs to pandemics.
Balance Hard and Soft Controls: Ensure rules exist, but nurture a culture where people speak up.
Adopt Listening Governance: Encourage whistle-blowers, feedback channels, and stakeholder dialogue.
Strengthen International Awareness: Learn from failures abroad; governance lessons travel across borders.

Read more on Navigating supply chain disruptions by the European Investment Bank.

Conclusion Corporate lessons from uncertain times: Steering Through the Fog

Uncertainty will not vanish. Pandemics, tariffs, and geopolitical shifts will remain part of the corporate landscape. The test is not whether organisations can avoid storms, but whether they can steer through them.

Governance is the art of balance: hard structures that provide stability, and soft controls that provide flexibility. Failures like Carillion, Boeing and Wirecard show what happens when the balance is lost. Successes like Unilever, Johnson & Johnson and ASML demonstrate that governance, when alive and authentic, can turn crisis into resilience.

In the end, governance is not a shield against risk, but the compass and rudder that allow a company to sail — even through fog and storm.