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Taking A Proactive Look at The Top Risks for 2024 and Beyond

In partnership with Howden Australia, we kick off 2024 with a perspective on the top emerging risks requiring proactive action by executives and boards for 2024 and beyond.
Risk trends, emerging risk
Published on
January 31, 2024

The landscape of risk is continually evolving, and executives in various industries are constantly challenged to adapt and plan for the future. Many businesses embark on 5, 10, and 20-year plans, often with a narrow view of the evolving threat landscape. As we approach the year 2030, the global business environment faces a multitude of risks and uncertainties that will demand strategic thinking and proactive preparation.

Cybersecurity Threats

Cybersecurity has been a persistent concern for executives in recent years, and it will continue to be a top risk going forward. The digitalisation of business processes and the rise of sophisticated cyberattacks make it imperative for organisations to prioritise cybersecurity. Executives must allocate resources to protect their data, infrastructure, and customer information, review third-party providers, as well as implement robust incident response plans to mitigate the impact of potential breaches.

Climate Change and Environmental Risks

The impact of climate change is becoming increasingly apparent, and executives are recognising it as a critical risk for the next decade. Climate-related events, such as extreme weather, rising sea levels, and resource scarcity, can disrupt supply chains and damage infrastructure. Commitment to Environmental, Social, Governance (ESG) will place additional pressure and require additional skill sets and financial resources. This is required to ensure companies are adopting and demonstrating sustainable practices, reducing carbon emissions, and investing in resiliency to mitigate the long-term impact of environmental risks. Identifying your ESG priorities will be the challenge for executives.

Geopolitical Instability

Geopolitical shifts are occurring on many levels. Changes to leadership and party priorities bring changes to intergovernmental and diplomatic relations. Actions by governments to support critical and often sensitive agendas bring tension and often divisions within subsets of the community, locally and abroad.

Geopolitical tensions and the initiation of war, while a humanitarian crisis, also can significantly affect businesses operating on a global scale. Trade disputes, economic sanctions, and political unrest can disrupt supply chains, impact markets, and create regulatory uncertainties. Executives must closely monitor international relations and be prepared to adapt their strategies as geopolitical dynamics evolve.

Supply Chain Disruptions

The COVID-19 pandemic highlighted the vulnerabilities in global supply chains. Executives are acutely aware of the need to build resilient supply chains that can withstand disruptions, whether caused by pandemics, natural disasters, or geopolitical events. Diversifying sources, embracing digital technologies, and adopting "just-in-case" inventory strategies are key considerations.

Technological Disruption

Technological advances can create opportunities, but they also present risks. Rapid technological disruption, including automation and artificial intelligence, can render traditional business models obsolete. Executives must embrace innovation, invest in workforce development, and remain agile to adapt to the changing technological landscape.

Regulatory Changes

Changing regulations and compliance requirements can be challenging for businesses in various industries. Executives need to stay abreast of evolving regulations, particularly in areas like data privacy, environmental standards, and consumer protection. Compliance requires leadership commitment to ensure operational and legal elements are met. Non-compliance can result in significant financial and reputational damage.

Economic Uncertainty

Economic uncertainty, exacerbated by factors like inflation, interest rate fluctuations, and fiscal policies, can impact investment decisions and market conditions. Executives need to review financial models regularly and must have contingency plans to weather economic downturns and capitalise on growth opportunities. Flexibility and adoption can only come from proactive review and reassessment.

Psychosocial Hazards and Wellbeing

The COVID-19 pandemic was the catalyst for change, highlighting the critical need for organisations to prioritise the mental health and well-being of their employees. For most Australian states, new regulations under the Work Health and Safety Acts require recognition and management of psychosocial hazards in the workplace, ranging from excessive workload demands to exposure to traumatic events and material to issues such as bullying, harassment, and sexual discrimination in the workplace.

In addition, there are business and social expectations that executives will be better prepared for future health events like pandemics or other disease outbreaks, reviewing health and safety protocols and contingency planning to ensure business continuity during health crises.

Social and Ethical Risks

Consumers are increasingly sensitive to issues related to ethics, social responsibility, and diversity and inclusion. Part of the Environment, Social, Governance (ESG) commitment reflects the need for social responsibility as well as inclusion; however, issues related to diversity and inclusion are far-reaching and can be challenging to navigate. Executives need to prioritise these aspects to avoid reputational risks, as public sentiment can significantly impact a company's success.

Talent Scarcity

The Fourth Industrial Revolution (4IR) merges the physical, digital, and biological worlds. It is changing the way we live, work, and relate to our environment. Rapid advances are occurring all the time, exposing new skill sets and knowledge gaps across many sectors.

The competition for skilled talent is intensifying, particularly in industries that require specialised expertise. Executives need to focus on talent acquisition and retention, upskilling their workforce, and creating inclusive workplaces to remain competitive.

Time passes so quickly. We are staring down the 2030 barrel. What can we do to navigate this complex and ever-changing landscape proactively? Understanding these emerging risks requires a combination of forward-thinking strategies and investment in technology, people, and culture. Businesses that embrace sustainability, resilience, and innovation while staying attuned to geopolitical and market dynamics will be best positioned to thrive in this decade. Executives must take a proactive approach to address identified risks and turn them into opportunities for growth and success.

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