ESG investing was built for a world that mostly behaved. The idea was simple: channel capital to climate-conscious companies, inclusive workplaces, and ethical supply chains, and the planet — not just your portfolio — would benefit. And for a while, it worked. ESG scores became a badge of honor. Funds slapped leaves on their logos. Boardrooms started sounding like climate summits. Everyone relaxed, like we had found the formula for saving the world and feeling good about our quarterly reports.
This is not a rejection of ESG but a recognition that good intentions need backup plans. The world has reminded us that cooperation isn’t a constant; it’s a convenience. And lately, it’s been anything but convenient. Supply chains have broken down like cheap umbrellas. Ransomware attacks have shut off pipelines and exposed just how vulnerable critical infrastructure is. Energy supplies have turned into geopolitical poker chips. Semiconductors have sold out faster than an IPO with “AI” somewhere in the name.
It has become clear that volatility isn’t the exception; it is the architecture. So, the question for asset managers and analysts is no longer just: Does this company have a solid climate pledge? It is now: Can this company still function if its cloud provider ends up on a sanctions list? Can it keep delivering products if its key supplier sits on the wrong side of a border dispute? What happens when the grid fails or data leaks? When “free trade” starts to unravel enough to make David Ricardo roll over in his grave? In short, the market has stopped applauding good intentions and started testing whether companies can withstand the world’s mess.
From Virtue to Viability
That shift — from idealism to viability — makes it clear that we need a new approach. So, I’m proposing ARMOR, which is short for Allocation for Resilient Markets and Operational Readiness. It borrows from how the US government frames national security objectives — not just as military defense, but as economic resilience, supply chain security, and infrastructure continuity. ARMOR gives institutional investors a practical way to evaluate ESG. It doesn’t reject ESG, it extends it. ESG asks if a company is sustainable in principle. ARMOR pushes further, asking if it’s built to survive in practice.
Resilience Isn’t an Appendix Item
That’s how ARMOR shifts the conversation. In this framework, resilience isn’t about having a perfunctory mention of cybersecurity buried in an appendix — the place where essential topics are acknowledged, then quickly forgotten. It’s about whether operations continue when energy is rationed. It’s about whether a company’s data are stored in a jurisdiction that might suddenly become adversarial, or whether its suppliers are all parked along a trade route that turns into a geopolitical flashpoint. ARMOR asks those questions up front, not after the fact.
When Models Miss the Real Risk
Value-at-Risk doesn’t blink when global tensions rise. Sharpe ratios don’t care if a company ends up on a sanctions list. A company might look great on paper — low beta, smooth returns, maybe even a shiny ESG report — and still get blindsided by a geopolitical punch it didn’t see coming.
That’s the blind spot ARMOR is designed to fill. It doesn’t just ask whether a company is financially healthy or ethically branded, it asks whether the lights stay on when the grid flickers, whether a business can still access its cloud provider if legal jurisdictions shift, and whether it has a plan B when trade routes turn into flashpoints or critical suppliers end up on a watchlist.
Building Portfolios That Survive the Mess
ARMOR blends portfolio strategy with geopolitical foresight. It’s not a vibe check — it’s a real-world stress test. Instead of optimizing for sunny days, it prepares for storms.
And let’s be clear: this isn’t just about dodging risk for safety. It’s about staying in the game. Because when fragility hits, the companies that survive — not just look good surviving — are the ones that end up leading. That’s not just resilience. That’s performance with staying power.
In this world, real diversification isn’t just spreading across sectors or regions. It’s about asking deeper questions. Are all your holdings relying on the same chip supply? The same cloud jurisdiction? The same energy corridor? If so, your “diversification” might be an illusion waiting to crack.
ARMOR flips the script. It says to stop measuring what looks efficient and start measuring what endures. That doesn’t mean throwing away Sharpe ratios or ESG filters. It means adding a layer that checks for durability when the rules of the game change, and lately, they have changed fast.
ARMOR won’t appear on your Bloomberg terminal yet. It’s a mindset — and increasingly, a toolkit — for navigating an asset management future where geopolitical shockwaves, infrastructure bottlenecks, and cross-border data fights aren’t rare. They’re becoming regular fixtures in headlines, earnings calls, and risk memos.
Resilience Is the Future of Performance
The world in which investors operate has changed, and the playbook needs updating. ARMOR is a step in that direction — not as a replacement for ESG or traditional models — but as a necessary add-on for a world where supply chains tangle, cloud access can vanish overnight, and resilience isn’t a luxury, it’s a survival strategy. In an era when stability can’t be assumed, asset managers must look beyond performance metrics and ask more complex questions about continuity, jurisdiction, and control. This new reality is not just about which companies perform but which ones endure.
#Resilience #Alpha #Rethinking #Risk #Fragile #World