RETHINKING RESILIENCE: TOP RISK MANAGEMENT TRENDS THAT FUTURISTS SAY TO TRACK

Companies will adopt a more system-level view in risk planning come 2024 and 2025, equipped with lessons from the Covid pandemic and climate events. Assessing intersections across operational, brand, ESG and other risks, while considering business model impacts holistically, is critical to enhance resilience. The focus on ecosystems and interconnected risks will spur investments in data-driven risk identification and supply chain tech to gain end-to-end transparency. Cross-functional resilience scenario planning and contingencies will gain adoption across sectors.

Advances in AI-Powered Risk Management

Risk analysis and planning will incorporate more decision intelligence technology such as AI tools for predictive risk assessment and simulation. With huge datasets on historical losses, near-miss incidents and external risk factors, algorithms can model and quantify vulnerabilities, while machine learning detects weak signals and emerging risk patterns. Come 2025, more risk functions will implement AI augmentation to enhance risk sensing, operational risk management, audit planning and business continuity programs.

Quantifying Climate Risk as the New Normal

Regulations like SEC climate disclosure rules in the US will necessitate rigorous, quantitative analysis of climate transition and physical risks. Sophisticated climate models will assess risks from acute and chronic weather impacts, as well as from policy, legal and market shifts. Scenarios on stranded assets, green revenues and adaptation costs will quantify exposures and inform strategic risk mitigation. Mainstream adoption of climate-risk integration will accelerate risk function capabilities on environmental issues.

Dynamic Risk Identification in a Fluid Environment

As external risk landscapes shift rapidly post-pandemic, risk functions must dynamically update assessments by tapping broader knowledge networks. Crowdsourcing risk insights from internal leaders, plus dialogue with customers, suppliers, start-ups and academia can reveal emerging weak signals. That expands visibility on fluid risks like cyber threats, supply shocks or demand fluctuations. External partnerships and participatory methods will also enable agile risk identification amid volatility.

Holistic Risk Coverage Spanning ESG Factors

Companies will face growing stakeholder demands to demonstrate rigorous management of environmental, social and governance risks. As regulators sharpen reporting requirements on ESG risk oversight, management disciplines will expand to formally cover sustainability factors – from climate to human rights and DEI issues. Firms will invest in risk governance structures and new executive roles (Chief Sustainability Officers) dedicated to overseeing ESG programs, strategic planning and risk mitigation.