Corporate risk radar 2024 – Part 2: Adapting to polycrisis

The 2024 Corporate risk radar reveals a critical ‘agility deficit’ threatening organisations' ability to navigate the volatile geopolitical and technology risk landscape. In an increasingly complex risk environment, businesses, which can overcome this, are ideally placed to capitalise on wider inertia.

Despite agility being widely recognised as a strategic imperative, less than half (48%) of respondents believe they can adapt their strategies to changing circumstances, only 37% feel equipped to modify operations, and a mere 22% are confident in implementing new technologies rapidly. The lack of technological agility is particularly concerning, given the challenges presented by generative AI.

To address the ‘agility gap’ a purpose-driven leadership approach is needed to encourage rapid cross-functional collaboration, and a shift from rigid structures to dynamic teams, building a culture that encourages employees to take calculated risks and challenge the status quo.

Geopolitical risk is the fastest-growing 'high impact' risk in 2024. The top concern among respondents is the threat of ’Recession’ (61%), followed by ’Raw material costs’ and ‘Supply chain disruptions’ (both at 37%).

In response, businesses are strengthening their horizon scanning capabilities, operational resilience, supply chain robustness, embracing 'nearshoring,' (the practice of relocating business operations to a nearby country to reduce dependency on potentially unstable supply chains) and fostering stronger supplier relationships.

GCs are more sensitive to risks such as ‘Reputational issues’ (43%) and ‘Doing business in conflict areas’ (54%) than their board and C-Suite peers, but they also feel more prepared to tackle these risks.

While generative AI offers immense potential for growth and efficiency gains, it has amplified perception of ‘External cyber threats’ (76%), ‘Compliance risk’ (40%) and ‘Complexity of systems’ (42%). Over a third feel (34%) unprepared for ‘Disruption caused by adoption of AI’.

To address these technology challenges, organisations are prioritising robust cyber defence, developing specific policy solutions to evaluate potential AI risks and returns, regulatory compliance, and strategic alignment of investment with business goals.

Explore our recently launched ‘AI regulation tool’, which aims to transform the way our clients operate. 

Regulation and compliance continues to be perceived as one of the top three high-impact risks to businesses in the next two to three years, with 58% of senior leaders identifying it as a burden. Somewhat unsurprisingly, this sentiment is most pronounced amongst legal teams, with 74% of general counsels highlighting it as a top risk, a 13% rise from the previous year.

Over two fifths (43%) see the management of regulatory issues as a growing threat, partly driven by a time and budget constrained commercial environment, and some frustration at new regulatory initiatives. Frustration is also expressed at a perceived lack of clarity and certainty in regulatory frameworks, caused by inconsistency and instability amongst some political institutions and governing bodies.  68% said that risk horizon scanning had become a more important part of their role than it was a few years ago.

Businesses across multiple sectors have been grappling with an ever-increasing burden of regulation. This trend has had significant implications for operational efficiency, compliance costs, and strategic planning.

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People challenges – attracting and retaining staff, upskilling staff, talent management and succession planning – is cited in this year’s report as the second biggest high impact risk facing corporates today.  58% of respondents identified people challenges as likely to have a high impact on their organisations in the immediate future.

Two years on from the end of the global Covid pandemic, organisations are still grappling with the after effects of the crisis, but the risks are increasingly diverse, predicated on location and sector. Rising to the challenge of such risk requires delivery of bespoke responses.

If you would like to speak to us about the risks you’re navigating, please get in touch in the link below.

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225 interviews (215 online and 10 qualitative) with senior business leaders (our largest sample to date)

• 81 Board members and CEOs
• 72 General Counsel (GCs) and Heads of Legal
• 72 senior C-Suite executives (including CFOs, CIOs, COOs and CROs).

The organisations we have consulted have a global presence, with over a third headquartered outside the UK (Europe 10%, Asia-Pacific 10%, North America 6%, Africa 7% and Middle East 2%) and with operations and individual professional responsibility at a global level.

Download the report