The Top Risks 10 Years Out: Global Risks Are Persistent

In this issue of Board Perspectives, we summarise 12 key takeaways:

Many short-term risks are likely to have a lingering impact for the long term. Eight of the top 10 risks for 2024 are top 10 risk concerns in 2034, with shifts in relative importance within the top 10.

Long-term risks are increasing. Our survey respondents also rated nine of the top 10 risks higher for 2034 than they did when looking out a decade in last year’s survey. The persistence and elevated significance of these risks, continued occurrence of unexpected events, and the specter of intensifying geopolitical tensions create a nuanced view of the future.

Cybersecurity is the most pressing risk issue. When combining near- and long-term views, cyber threats arguably stand out as the most significant risk issue for boards and C-suite leaders.

The rapid speed of disruptive innovations is on global leaders’ radar. Advances in AI, automation in all its forms, quantum computing and other technologies are driving waves of disruption that will impact business models and alter customer experiences.

People-related risks are also top of mind. Finding and keeping talent is the second-highest-ranked risk looking out over the long term. Shortages of new skills in the market necessitate significant efforts to upskill and reskill existing employees. This is the third-ranked risk. Additionally, increases in labor costs represent the ninth-ranked risk for 2034.

The inability to utilise rigorous data analytics creates a significant pause for organisations focused on their long-term positioning. Businesses successful at deploying forward-looking lead indicators and integrated analytics are more likely to be anticipatory and prepared — and leaders know it. This risk is rated 10th overall for 2034.

Third-party risks rise in importance. As reliance on third-party relationships increases, cyber threats and regulatory compliance risks come into play. Organisations must ensure their third-party vendors — as well as vendors further downstream — are complying with current laws and regulations.

The threat of regulatory risk looms long-term. The fifth-ranked risk overall for 2034, this risk varies by industry with some heavily regulated, such as financial services and healthcare, and others facing the likelihood of increased regulation, such as technology.

The economy and sustaining competitiveness complete the picture. Uncertain economic conditions and the limiting obstruction of aging technical architecture and the inability to compete with “born digital” players are the remaining top 10 risks for 2034.

Sustainability risks have elevated. The growing focus on climate change and sustainability policies, regulations and disclosure requirements, as well as expectations of key stakeholders, increased from the 22nd-ranked risk looking out 10 years to 13th this year. This risk is a top five risk in Europe and the Middle East.

Risk profiles are sensitive to geopolitical events. A pervasive uptick in respondents highlighting geopolitical and many other risks occurred in responses received during the last week of our survey due to the outbreak of war in the Middle East. In our economically interdependent and geopolitically splintered world, fragmentation has manifested itself in recent years. Despotic leaders and emboldened terrorist organisations are asserting themselves all over the globe.

More disruptive times lie ahead. Six of the top 10 risks looking out 10 years are rated at the “Significant Impact” level (versus only three last year). The dynamic risk landscape and its elevated risk levels sustain the ongoing narrative that the 2020s are indeed a decade in which disruption will manifest itself in many ways. The question that leaders in every organisation face in the global marketplace is: Are we being disrupted and, if so, how and when would we know?

For more discussion of the above takeaways and key points for boards and C-suite executives to consider, read here.

(Board Perspectives — Issue 172)