A lasting impact: Volatility as the new normal in valuations

In summary

• Volatility is now a constant feature in public and private markets 
• Market shocks – from the global financial crisis, through Brexit, to Trump’s tariffs have had a lasting impact on businesses and expectations 
• Valuation methodologies need to take account of a world in which geopolitical risks and black swan events are no longer peripheral 

Heightened volatility is a constant for businesses currently. Unusual times are now the new normal. Shock events are sometimes clearly distinguishable as political or economic, but the line between the two continues to blur. Many have both political and economic motivations and consequences. Previous expectations of how the markets may react to a particular type of shock no longer hold true. Today, expectations of stability are diminishing, undermining analysts’ ability to forecast market behaviour. 

Given this context, how should companies and practitioners assess the impact of more frequent short-term and long-term volatility shocks? While there have been several events we could look at in recent memory, for present purposes we seek to understand how volatility has changed over time with data from the FTSE All-Share Index over four significant events: 

1. The global financial crisis, starting in September and October 2008, following the collapse of Lehman Brothers and panic set in over the subprime mortgage crisis and banking failures, with listed UK banks losing up to 90% of their value 
2. Brexit, triggered by the June 2016 referendum vote in the UK to leave the European Union 
3. The Ukraine crisis, starting from Russia’s invasion in February 2022 
4. US tariffs under the Trump administration, implemented in April and May 2025