Given all these risks, it's hardly surprising that business leaders are reluctant to venture into new markets, launch new products, and rebuild payrolls. Right now, economists' best hope for a return to robust economic growth is that once these risks abate, business leaders will get back to, well, business again.
Waiting for that outcome has one big problem, however: It's becoming increasingly clear that these business risks aren't going away any time soon. So, for the economy to stay afloat and the U.S. to retain its status as the global engine of growth, CEOs have to learn to live with the new climate of risk.
ALTERNATIVE SCENARIOS. Consider Iraq. Business leaders have been on the edge of their chairs for at least six months now. Yet even as President Bush does his best to keep the urgency up, repeating threats that "time is running out" for Iraq to disarm, any number of scenarios could still play out. Saddam might be squeezed out of power in a largely bloodless coup. Or an invasion could still be delayed for weeks, if not months, as inspections drag on and U.S forces gear up.
Despite U.N. inspectors' discovery on Jan. 16 of warheads in Iraq, there's still room for hope that the situation could be resolved without armed conflict. Whatever Saddam's fate, though, Iraq is not fading from the headlines any time soon, as the U.S. and U.N. try to build a new political and economic infrastructure in a region that might be resistant to radical change.
Then there's the rest of the world. While the U.S. is doing its best to ease tensions with North Korea, chances are Bush will deal with this branch of the three-pronged "axis of evil" he targeted last year at a later date. And that would still theoretically leave him Iran to contend with. These "crises" will be measured in years, not months. Others are bound to crop up, too. Venezuela, now being torn by strike and political tension, is an example of how events that threaten U.S. economic health can erupt with little warning.
BUCKING THE TRENDS. Let's face it: Global terrorism, by nature, is a moving target that will be impossible to completely squelch. That's a reality business leaders need to accept. And the fallout from corporate misdeeds isn't going away either. In January, Bush promised to significantly increase the budgets of the Securities & Exchange Commission and the Justice Dept. so they can better fight corporate fraud.
A few examples are cropping up of companies willing to show some initiative in spite of the ongoing risks. Smart businesses will recognize the new realities and learn to adapt, if not to use the current climate to corporate advantage. At a time when Wall Street research has been discredited, discount brokerage Charles Schwab (SCH
) has launched a new advertising campaign, including an upcoming Super Bowl spot, designed to promote its claim of unbiased research.
Other examples: Underwriter Aon Corp. (AOC
) announced on Jan. 15 that it's the first insurer licensed to do business in China. And New York Times Co. (NYT
) has partnered with Discovery Communications to launch a new TV station that will cover global issues in depth. It debuts this March with a special on terrorism.
FACING THE MUSIC. More CEOs need to adapt their own business strategies for a world that will probably never again seem quite as safe as it did just a few years ago. Staying frozen in time isn't an option for individual companies or for the U.S. economy.
In business, you're either moving ahead, or you're slipping behind. The world isn't going to become a safer place to live in or work in tomorrow or next quarter. Businesses need to just accept that fact and find ways to prosper anyway. Stone is an associate editor of BusinessWeek Online and covers the markets as a Street Wise columnist and mutual funds in her Mutual Funds Maven column