Today’s risk landscape is more complex and interconnected than ever before. As we prepare to go to Madrid for this year’s FERMA Forum, it’s a good time to reflect on how we risk managers navigate the challenges and opportunities ahead.

It’s been several years since the height of the COVID-19 pandemic, but there’s no escaping the fact that it fundamentally altered the risk landscape, accelerating the pace of change in risk management. Companies now face a multitude of other global challenges, including escalating geopolitical tensions, climate change, and cyber threats. The interconnected nature of these risks means that a crisis in one area can quickly escalate and impact others.

Global risks, local impacts

This year has already been marked by significant geopolitical events, notably with ongoing regional conflicts and a multitude of significant national elections. The upcoming US election may create a further level of uncertainty that risk managers must address. The conflicts between Ukraine and Russia, and in the Middle East continue to disrupt supply chains and international relations, adding another layer of complexity to the risk landscape. 

As these conflicts evolve, risk managers must consider the broader implications of such events, including any potential regulatory changes and shifts in political alliances as well as the broadening of existing or new sanctions. The interconnected nature of today’s world means that a crisis in any one of these region can quickly escalate and affect others, making it crucial for risk managers to stay informed and adaptable.

Invisible risk

The integration of AI into daily operations has transformed the cyber risk landscape. While AI offers numerous benefits, it also brings new challenges, such as data privacy concerns, liability issues, and security vulnerabilities. The recent CrowdStrike outage highlighted how even minor errors can lead to major disruption, emphasizing the need for robust cyber risk management strategies. Risk managers must address the dual challenges of securing AI systems and managing the broader implications of AI-related risks. This includes staying ahead of regulatory changes and ensuring that their organizations are prepared for the evolving cyber threat landscape.

Changing climate

Climate change remains a pressing issue that affects all aspects of risk management. The increasing frequency and severity of climate-related weather events demand proactive measures to mitigate their impact. Additionally, ESG factors are gaining prominence as stakeholders demand greater accountability and sustainability from organizations. Risk managers must integrate ESG considerations into their risk frameworks to address environmental and social risks effectively.

While the current risk landscape presents numerous challenges, it also offers opportunities for innovation and driving positive change. For instance, leveraging AI and data analytics can enhance risk assessment and decision-making processes. Additionally, fostering a strong risk management culture can improve organizational resilience and create a competitive advantage.

Though our clients are facing a number of significant challenges, by embracing innovation and adopting a proactive approach, risk managers can turn these challenges into opportunities. The key is to stay informed, adaptable, and resilient in the face of an ever-evolving risk environment, and it’s here risk managers can play a key role. By developing deep partnerships with clients, risk managers can better understand and support them to navigate this uncertain world and build in operational resilience to help mitigate and manage the impact of this multitude of threats.