This is Not a Drill: Governance Through the 2026 Iran War

Australian directors can no longer treat the Middle East as someone else’s problem.

On 28 February 2026, the United States and Israel launched joint military strikes against Iran, killing the Supreme Leader and triggering a full-scale regional war. Iran responded targeting Israel, US military bases across the Gulf, and civilian and energy infrastructure from Bahrain to the UAE. Within days, airspace across eleven countries had closed. Over 115,000 Australians were stranded. Oil topped US$100 a barrel. The ASX 200 fell six per cent.

This is not a risk committee scenario. It is happening now, in the second week of March 2026. For Australian directors, the question is no longer whether to prepare for geopolitical disruption. It is whether your board was already prepared, and whether you are governing through this crisis with the rigour your shareholders, employees, and stakeholders expect.

Those of us who governed through the Global Financial Crisis know what it means for confidence to collapse and liquidity to vanish almost overnight. The GFC taught boards that crisis governance demands decisiveness under uncertainty. Organisations that fared best had already stress-tested their capital structures and did not allow management to soften emerging risks in the boardroom. The directors who performed well asked uncomfortable questions early, even when the answers were unwelcome.

COVID-19 reinforced those lessons and added new ones. Supply chains assumed to be resilient proved fragile. Workforce disruption became a strategic threat overnight. The pace of government and regulatory change outran standard meeting cadences. The boards that led well convened urgently, communicated candidly, and acted on the best available information rather than waiting for certainty that never arrived.

The 2026 Iran war demands the same quality of governance, with one additional dimension. Unlike the GFC or COVID, this crisis combines an energy shock, a trade route disruption, a people emergency, and an elevated cyber threat simultaneously. That compounding nature is precisely what makes it so demanding. Directors who draw on the lessons of the past two decades will be better placed to lead what follows.

The Scale of the Disruption

The conflict has exceeded most corporate scenario plans in speed and breadth. Iran struck US military bases and launched more than 90 attacks against Israel in the first five days. Saudi Aramco’s refining facility was hit by drones. Dubai International Airport came under repeated attack. Qatar’s energy minister warned that Gulf producers may be forced to declare force majeure and halt exports, which he described as capable of bringing down economies of the world.

DFAT’s Smartraveller has issued its highest advisory across eleven countries, and advises reconsideration of travel. Dubai, Doha and Abu Dhabi are among the world’s busiest transit hubs for Australian business travellers, and the Australian Travel Industry Association has confirmed the disruption is broader than most organisations anticipated.

The Economic Impact in Australia

The financial impact in Australia is active, not theoretical. WTI crude jumped approximately 19 per cent in the first ten days to around US$108 a barrel. Westpac has modelled three scenarios: Iranian supply disruption alone lifts Australia’s CPI by around 0.7 percentage points; a one-month Strait of Hormuz closure adds around one percentage point to CPI and trims GDP by 0.2 points; a three-month closure could spike CPI by 1.5 percentage points and reduce GDP by 0.5 points by year’s end.

The NRMA expects petrol prices to rise around ten per cent near term, with Australians potentially paying $1 a litre more at the worst end of modelled scenarios. AMP’s chief economist has warned that a prolonged conflict extending beyond three months could see oil reach approximately US$150 a barrel.

CommBank noted the most direct impact is through fuel prices feeding into broader inflation. Bloomberg has reported that this is keeping alive the prospect of further Reserve Bank rate increases, a material consideration for any board overseeing leveraged or capital-intensive operations.

Fuel Security is a Problem Most Boards Have Not Confronted

Australia imports more than 90 per cent of its fuel. At the start of 2026 it held roughly 36 days of petrol, 34 days of diesel and 32 days of jet fuel in reserve, the largest stockpile in 15 years. Yet the International Energy Agency still regards Australia as non-compliant with strategic reserve requirements, a status that has persisted since 2012.

In a declared fuel emergency, priority goes to defence and critical services ahead of commercial distribution. Boards in transport, logistics, healthcare, and manufacturing should be asking: how many days can operations continue under supply disruption? Are contractual protections or alternative supply arrangements in place? Is this genuinely actionable on the risk register, or merely a line item?

People, Travel, and Duty of Care

Over 115,000 Australians were stranded when regional airspace closed in early March, and DFAT’s crisis registration portal is now active across seven countries. Organisations with staff or contractors in the region face immediate duty-of-care obligations. Several ASX-listed firms and universities have already moved to require executive approval for any travel to high-risk jurisdictions.

Smartraveller’s broader global advisory also warns of protest and terrorism risk, noting that airports, hotels, and shopping malls frequented by foreigners are prime targets. Control Risks and International SOS report a spike in enquiries from Australian multinationals with European staff, reflecting concern about retaliatory attacks on Western interests well beyond the conflict zone.

Boards must confirm that travel risk policies are current, emergency protocols are activated, and psychological support is available to affected employees. The Insurance Council of Australia has confirmed that most standard travel policies exclude war and armed conflict losses. Organisations relying on standard coverage may be exposed.

What Effective Governance Looks Like Right Now

The quality of governance in the first few weeks of a crisis determines whether an organisation navigates well or is caught flat-footed. Here are five things for boards to consider now:

Convene an urgent board briefing if you have not already done so. Not a management email update. A structured session with the CEO, CFO and risk function covering energy costs, supply chains, people, insurance gaps, counter-party risk, and cyber. The ASX 200 has fallen six per cent. Shareholders will be asking questions.

Stress-test the financials against Westpac’s three scenarios. The three scenarios, from Iranian supply disruption only through to a three-month-plus Hormuz closure, have materially different implications for cost structures, margins, and debt covenants. Directors should know which scenario triggers a material impact on their organisation, and at what oil price.

Audit your continuous disclosure obligations. ASX Listing Rule 3.1 requires immediate disclosure of material information. If your organisation has meaningful exposure to energy costs, the Strait of Hormuz, or the conflict zone, and has not yet made disclosure, that is a governance and legal risk requiring urgent attention.

Activate cyber threat monitoring. Conflicts of this scale consistently produce elevated cyber threat activity against Western interests. The ASD recorded a cybercrime every six minutes in 2024, and geopolitical conflict amplifies that risk. Boards should confirm their CISO is operating at heightened alert and that incident response plans are current.

Communicate with stakeholders proactively. Employees, investors and suppliers are all navigating uncertainty. Boards that stay silent while stakeholders experience disruption damage trust. Where exposure is material, a clear and honest communication from leadership about what is known, what is being monitored, and what protections are in place is both good governance and good management.

The Governance Standard Expected Has Never Been Higher

The 2026 Iran war is the most significant geopolitical shock to reach Australian boardrooms in a generation. Whether it resolves in weeks or continues for several months, the governance lesson is already clear: boards that treat geopolitical risk as a standing strategic priority are better positioned than those that treat it as background noise. The events of the past ten days have made the AICD’s case for scenario planning and supply chain resilience beyond any reasonable dispute.

As directors, we carry a duty to govern with foresight, rigour, and genuine care for the organisations and people in our charge. The boardroom is on the front line, and the standard expected of us has never been higher.

About: Gary Morgan is a director, board advisor and principal consultant at MPT Innovation Group, specialising in governance, technology strategy, and organisational transformation for private and not-for-profit organisations. He is a Fellow and Member of the Queensland State Council of the Governance Institute of Australia, and an Adjunct Industry Fellow and Member of the Griffith University Industry Advisory Board for the ICT School. Gary publishes regularly on board governance, AI, technology, and cybersecurity.

Acknowledgment: This article represents the author’s independent views and incorporates AI-assisted research and drafting.