Key Issues Currently Reflected in the Risk Selection
The risks identified by North American participants are in line with our expectations. Perception of cyber risk was likely influenced by numerous high-profile breaches and the proliferation of new and existing threats. Business interruption is an obvious concern that is also reflected in other risks, including supply chain or distribution failure and workforce shortage. Pandemic risk and health crisis ranked at number 12, and vendor management and third-party risk ranked at number 14. Collectively, these are powerful, interrelated risks for the region.
Also notable is the number-three ranking of damage to reputation or brand. ESG risk did not make the top 20, but it may be reflected in the number-eight ranking of regulatory or legislative changes (rank eight in 2021 and rising to rank seven in three years’ time). These changes are influenced by climate change and other prominent social risks. The thoughts and actions of risk managers seem to be swayed by these prominent risks.
Climate change risk is underrated despite a great deal of public attention and mounting evidence of its effects. Millennials take climate risk more seriously than older generations, however, and they will have a growing impact on consumer and employment choices. This dynamic will help bring climate change and other underrated ESG-related risks to the forefront.
Additionally, new ways of working, including remote and hybrid work, ramped up dramatically during the COVID-19 crisis. If the shift becomes permanent, it could support the fight against climate change — but it would also have a big impact on regional and global economies.
Loss of intellectual property and property infringement is another substantial risk that was highly underrated by survey respondents — but that may be because other areas of the respondents’ organizations have the responsibility for mitigating and managing it.
Future Challenges and How Organizations Can Address Them
Identifying and quantifying risks remain foundational risk management activities. Articulating the potential impact of those risks in a fundamentally optimistic business culture is a perennial problem. Since the volatility of risks is accelerating, the ability to articulate their potential impact and secure investments for mitigation is perhaps the main challenge faced by organizations today.
Current Top 10 Risks
Predicted Future Risks