Blind Spot in the Boardroom: Why Europe’s Top Business Schools Don’t Teach Public Affairs — And Why It Can Cost You

By Stefan Borst

In my work in global Public Affairs one thing always struck me as odd: US CEOs never needed convincing that the PA department was important. They rarely ever challenged its value for the company or the budget (which tends to be significantly larger than those of EU counterparts). In stark contrast the scepticism of European C-suite executives towards the PA function was significantly higher. I always asked myself „why“.

It is certainly not the basic understanding that politics matter. 94% percent of C-level executives say political risk is increasing in its impact on their companies. Only 55% feel confident they can manage it. Between those two numbers lies a gap worth billions - and as I found out, its origins can often be traced back to a lecture hall. After all, where were today’s leaders supposed to learn how the political and regulatory environment shapes business – and more importantly how to shape it back? The answer in Europe is: almost nowhere. At least not until they are already in the C-suite, facing a regulatory headwind.

In a quick research I found that about 40% of US top-10 schools have Public Affairs as part of their curriculum. In Europe that number drops to 11%. US schools have dedicated academic infrastructure (Stanford POLECON, Harvard BGIE unit, Wharton Political Risk Lab) — EU business schools have nothing equivalent. The US schools train executives to perceive the political environment as a strategic variable to manage and influence; Europe treats it as contextual background.

The Curriculum Gap: What Europe’s Top MBA Programs Actually Teach

The curricula of the top-ranked European business schools - INSEAD, London Business School, HEC Paris, Oxford Saïd, IESE, IMD, ESMT Berlin, and others – are telling a clear story:

Among Europe’s elite MBA programs, INSEAD stands alone in making the political environment a mandatory core course. Its “Business and Society” module covers ethics, public policy, and political environments, while a separate “Political Environment” core course explicitly addresses non-market strategies for competitive advantage. The school’s own curriculum notes describe it bluntly: “As you progress in your business career towards higher-level management, your ability to assess and handle the political environment will become an increasingly significant skill.”

At every other top European school, the political dimension of business is either an optional elective, embedded as a minor component within a broader “strategy” or “business in society” module, or simply absent. London Business School’s core course on geopolitics touches on policy but does not address corporate Public Affairs practice. Oxford includes “corporate diplomacy” within its Global Strategy elective, but as one topic among many. HEC Paris requires a dual degree with Sciences Po to get any meaningful Public Affairs education – a program designed for a handful of students, not the broader MBA cohort.

The German schools – ESMT Berlin, Mannheim, WHU – focus heavily on technology management, innovation, and entrepreneurship. Government relations and regulatory strategy do not feature. IESE and IMD, both highly regarded for leadership development, treat the regulatory environment yet again as contextual background rather than as a discipline executives need to master.

Why This Matters

Consider what this means in practice. A typical European executive will have studied finance, marketing, operations, organisational behaviour, and strategy in considerable depth during their MBA. They will have done case studies on market entry, supply chain optimisation, and M&A integration. They may have spent a term on digital transformation or sustainability.

But when it comes to the political and regulatory environment – forces that increasingly determine whether a chemical substance can be placed on the market, whether a merger receives antitrust clearance, whether the ETS or a carbon border adjustment fundamentally reshapes competitive dynamics – they likely received, at best, a few sessions within a broader course. No frameworks. No tools. No practice - and most importantly very little understanding of how a professional PA function needs to be set up, the impact of policy on the bottom line and how to manage political risk properly.

The EY-Wharton Political Risk Lab put numbers to the consequences. Their survey of over 1,000 C-level executives found that most companies relegate political risk management to a Public Affairs or Government Affairs function that operates in a silo, disconnected from different functions across the company and from local-level executives such as country managers. The result: political risk doesn’t get connected to financial forecasts, value-at-risk calculations, or strategic planning.

As Professor Witold Henisz of Wharton summarised: “The biggest gap is turning data into value at risk by quantifying the value of political risks. How is it going to impact revenue? How is it going to impact productivity? They don’t connect the dots — that’s where the biggest opportunity is.”

Three Consequences of the Education Gap:

1. PA Gets Treated as a Cost Centre, Not a Strategic Function

   
   

When executives don’t understand what Public Affairs can deliver, they default to treating it as a communications sub-function or a compliance overhead. PA budgets are among the first to be cut in downturns — precisely when regulatory risk typically intensifies. The function reports too low in the hierarchy and is consulted too late in strategic decision-making.

2. Political Risk Is Treated Like Weather

Without formal training in non-market strategy, many executives treat political and regulatory developments as exogenous shocks — things that happen to you, not things you can anticipate, influence, or leverage. The EU’s more than 13,000 new trade and capital control regulations introduced over the past five years didn’t appear overnight. They were signalled, debated, and shaped through consultative processes. Companies that saw them as weather events paid the price. Those that engaged strategically found competitive advantage.

3. The Opportunity Side Gets Missed Entirely

Most executives who encounter Public Affairs defensively — through a regulatory problem or a political crisis — never learn to use it offensively. Regulation can be a powerful competitive weapon. Companies that help shape standards, contribute to policy design, and position themselves as constructive partners to regulators can erect barriers to competitors, accelerate market access, and build reputational capital that pays dividends across business functions. This is not lobbying in the traditional sense. It is strategic positioning in the non-market environment, and it requires the same rigour and investment as market strategy.

What Needs to Change

I don’t expect business schools to overhaul their curricula overnight based on a blog post. But I do think executives can — and should — close this gap themselves. Here’s where to start:

· Audit Your Own PA Literacy

Can you name the three regulatory developments most likely to impact your P&L over the next 24 months? Can you articulate your company’s political positioning on the issues that matter most to your sector? If the answer to either question is uncertain, you have a gap worth addressing.

· Elevate PA in Your Organisation

Public Affairs should report to the CEO or the board, not to a VP of Communications. It should have a seat at the strategic planning table, not be briefed afterwards. The function needs access to the same business intelligence, financial data, and strategic context as any other C-suite function.

· Assess Your PA Function Like Any Other Business Unit

You wouldn’t run a finance function without regular audits. You wouldn’t operate a supply chain without performance benchmarks. Yet most companies have never conducted a structured assessment of their Public Affairs capabilities, processes, or impact. A PA maturity assessment – examining everything from organisational setup and stakeholder mapping to policy intelligence and cross-functional integration – can reveal gaps that have been costing you for years.

· Translate PA Into Business Language

The PA function itself bears some responsibility for the gap. Too often, Public Affairs professionals speak in the language of politics rather than the language of business. “Stakeholder engagement” means little to a CFO. “Relationship capital that reduces regulatory approval timelines by four months and accelerates revenue recognition by 15M€” does. The function needs to measure and communicate its value in terms the C-suite understands: risk mitigation, competitive positioning, market access, and revenue enablement.

Final thoughts

The relative absence of Public Affairs from EU business school curricula isn’t an oversight – it’s a reflection of how the European business world has historically viewed the function: as peripheral, reactive, and soft. That view was always questionable. In today’s environment of geopolitical fragmentation, regulatory complexity, and industrial policy revival, it is untenable.

The executives who will navigate the next decade successfully are those who treat the political and regulatory environment not as a backdrop to strategy, but as a core component of it. Whether they learned this in a lecture hall or on the job, the skill is the same. The only question is how much it costs to acquire it late.