Future Risks: How organizations see changes in risk management
In our survey1, we asked risk decision-makers to assess what risks they would see in three years. In this infographic, we’ll explore the differences between the current and future state and how some risks seem to be durable to risk decision-makers.
Risk Management Professionals Are Adept at Looking Into the Future and Determining Potential Risks
Looking back at projections from 2019, out of the top 10 predicted risks for 2021, only two — accelerated rate of change in market factors and failure to attract and retain talent — did not make it into the actual top 10 risk list and were replaced by pandemic risk health crises and supply chain or distribution failure, respectively.
What Are the Top Risks Today and What Are Risk Managers Looking at in 2024?
Scroll from left to right to read full table.
| Risk Description | Current Risk Rankings |
Projected Rank in 2024 |
|---|---|---|
| Cyber Attacks/Data Breach | 1 | |
| Business Interruption | 2 | |
| Economic Slowdown/Slow Recovery | 3 | |
| Commodity Price Risk/Scarcity of Materials | 4 | |
| Damage to Reputation/Brand | 5 | |
| Regulatory/Legislative Changes | 6 | |
| Pandemic Risk/Health Crises | 7 | |
| Supply Chain or Distribution Failure | 8 | |
| Increasing Competition | 9 | |
| Failure to Innovate/Meet Customer Needs | 10 |
Respondents are not predicting wholesale changes to the relative importance of risks in the future. For example, cyber risk is projected to occupy the top spot globally and in North America in the future. Behind this trend may be rapidly changing definitions and profiles of existing risks, in areas such as business interruption, supply chain, and cyber.
Comparisons Across Regions and Industries
Data Breach
The risk of data breach is predicted to remain in the top spot for the Asia-Pacific region, Europe, and North America; number two in the Middle East and Africa; and, for the first time, in the top five for Latin America. It is a top three future risk across all industry sectors, which further highlights the fact that this most complex risk will continue to be a core focus for businesses across the globe.
Failure to attract and retain top talent
Failure to attract and retain top talent is predicted to be the number two risk in North America three years from now, but does not make the predicted top five in any of the other regions. We assume this is driven by an aging workforce (compounded by the political environment and COVID-19 stimulus in the current risk rankings) and a dramatic population decline.
How do organizations address the future?
The impact of the COVID-19 pandemic has demonstrated the interconnected nature of risk. Risk profiles continue to be in a state of flux as businesses emerge from the pandemic. With a current absence of historical loss data for many emerging risks, the challenge will be to forward-think how to best develop solutions to properly prepare for and manage through them. To address these challenges, we suggest that organizations focus on these key priorities:
Understanding new forms of volatility
Building an understanding of holistic risk management solutions to solve for emerging threats and long-tail risks.
Considering access to new forms of capital
Understanding how to create alternative sources of capital that support risk taking and preserve existing capital to address recent hard market cycles and lack of capacity for emerging risks.
Building a resilient workforce
Considering the role of all employees in building solutions for, and addressing challenges stemming from various threats; including how the future of work will be impacted and continue to evolve.