Europe, Middle East and Africa
Key Issues Currently Reflected in the Risk Selection
The EMEA region continues to grapple with broad issues of availability of products, components, ingredients and raw materials. Some of this is a holdover from the height of the pandemic, but Brexit’s ongoing impact and some high-profile supply chain exposures — for example, the chip shortage from Asia and the blockage of the Suez Canal — have also taken a toll. The theme of availability features significantly in the EMEA region’s list of top 10 risks, including business interruption (number one), commodity price risk/scarcity of materials (number three), and supply chain or distribution failure (number five).
Companies across most industries in EMEA have accelerated digital-transformation programs as a result of the pandemic. This is reflected in the top 10 risks; for example, cyber attacks and data breach ranked at number four following a huge increase in remote work, and increasing competition ranked at number seven, as new market entrants take advantage of the increasing digitalization of products and services.
Workforce shortage ranks surprisingly low at 15. As the pandemic slows, labor markets have rallied across EMEA; some countries now have more open positions than at any time in the recent past and are struggling to fill them. The U.K., for example, is coping with the impact of foreign nationals returning to their countries of origin following Brexit, and industries such as food and drink are trying hard to find workers in driver and factory roles, which correlates with business interruption risk.
It is also surprising to see climate change far down the list of priorities, given both the commitment of many European countries to the climate change agenda and the high-profile extreme weather events that have occurred over the past two years in countries such as Germany, the Netherlands, Italy and Belgium.
Future Challenges and How Organizations Can Address Them
Rapid change and the ongoing emergence or acceleration of different forms of volatility — for example, in areas such as ESG, supply chain complexity and the potential for more health crises — will keep risk front and center on the strategic agenda. Companies need to ensure they understand these risks and their potential impact, allocate appropriate levels of capital to their management, and capture them in the overall enterprise risk management process.
Current Top 10 Risks
Predicted Future Risks