Editor's note: Wes Bricker is Vice Chairman of PwC US and Co-Leader of the Trust Solutions practice. The views expressed in this article are solely those of the author.

Over the past year or more, the steady rise in interest rates has become a persistent macroeconomic narrative. Its trickle-down effects on the stability of the banking system, price levels, and the broader economy have kept it at the top of corporate executives' agendas.

As interest rates rise, operating costs across industries increase, forcing management to closely monitor cash flow, diversify revenue streams, adjust pricing, drive business transformation, and take a range of other measures to proactively respond to the changing market environment.

From both historical experience and current conditions, interest rates are clearly procyclical. In a rising-rate environment, the costs of goods and services may increase, which in turn feeds through to consumer prices. However, for businesses and management operating in this rate environment, the key is to ensure that the adjustments and measures taken in response to rising rates do not simultaneously jeopardize the long-term future of the enterprise.

The following four key steps can help business leaders maintain operational agility when navigating rising interest rates while protecting long-term growth:

1. Step up scenario planning

The board and the entire management team should assess multiple scenarios, including both projects already underway and situations anticipated to occur in the future. Each scenario should be examined for its impact across the entire enterprise, from pricing power and profit margins at the top to investment and financing activities at the bottom. Particularly for companies with cross-border operations, risk exposures across different regions should be considered comprehensively, along with potential impacts on everything from supply chains to the workforce.

Develop response plans for each scenario, refining them to the greatest extent possible and making forecasts where feasible. Even if plans are continually revised in response to volatility and other changes, simply putting scenarios in writing and establishing action plans puts the company in a stronger position to flexibly adjust and adapt to inflationary changes and pressures.

2. Re-examine pricing power and cost structure

Use the window of rising interest rates to reassess cost structures and pricing power, identify areas for adjustment, and drive business transformation. For example: Are there technology investment opportunities to automate business processes at lower cost? Can the workforce be redeployed to new business areas? Is there room to enter new market segments through upskilling?

On the cost structure front, key considerations include: which parts of the business are most sensitive to rising rates, the flexibility of contract terms, and potential opportunities for interest rate risk management. While companies cannot control market rates, they can control how they respond.

3. Focus on areas that create the most value

In a high and rising rate environment, the cost of operating and competing is far higher than normal, and the risks are greater. Many companies will tend to become conservative, so it is essential to conduct thorough due diligence and direct resources to the areas that create the most value and best drive strategic execution.

Management teams with diverse backgrounds, experiences, and ways of thinking will be better equipped to navigate the ripple effects of interest rate changes. This is the time to leverage expertise in key areas such as geopolitics, supply chain management, and sustainability. Management should identify what is controllable and what is not, and develop strategies accordingly to mitigate risks and pursue growth.

4. Build a fortress balance sheet

Ensure the company has sufficient liquidity and capital resources to weather difficult periods—no matter how long they last. Examine how capital is allocated across business segments to diversify risk exposures, and look for opportunities to make strategic investments through M&A. Although transaction costs are higher, the cost of missteps is often even greater.

Interest rates may continue to rise, and if they do, companies must ensure that actions taken now do not hinder future growth. By always keeping the long term in view when responding to the current rate environment, companies can withstand current economic headwinds while laying a solid foundation for future growth.