The Top Risks for 2024: Risk Priorities Are Shifting | Protiviti Australia

Conducted in partnership with the NC State ERM Initiative, our global survey of C-level executives and directors highlights the influence of economic headwinds, talent issues, emerging technologies, cyber threats and geopolitical events on the 2024 risk landscape. This issue of Board Perspectives discusses the 10 highest-rated risk themes noted in the survey to provide a context for understanding the most critical uncertainties companies face over the next 12 months.

By the numbers: Key survey takeaways are summarised below.

Economic concerns zoom to the top risk position.

Economic conditions, particularly inflationary pressures, replaced talent risk and succession issues as the number one risk globally for 2024 (up from second in 2023).
Uncertainty continues in the market over central bank policies amid persistent inflation.

People-related risks remain top of mind; culture take a back seat — at least for now.

The number two risk for 2024, finding and keeping the right kind of talent, is particularly relevant in an era when the talent desired is not abundant in the market. Organisations must reinvent their talent strategies to create a magnet for the unique kinds of talent they need.
The need to reskill and upskill employees is a challenge now. As the sixth-ranked risk for 2024, the state of labor markets and the expected adoption of digital technologies requiring new skills in short supply necessitate significant efforts to upskill and reskill existing employees over the next decade.
The ninth-ranked risk for 2024, rising labor costs continue to be a persistent concern.

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Cybersecurity is a major concern over the near term. Cyber threats are the third-rated risk for the next 12 months, elevated from 15th in last year’s survey.

This elevated concern reflects growing recognition of a complex cyber-risk landscape that is impacted by the exponential curve of technological advances.
But other forces, such as increasing reliance on third parties, also contribute to the threat landscape.

Third-party risks rise in importance. With greater reliance on third parties to perform critical business services, executives are increasingly focused on the risks that may emerge in light of these relationships. Among all 36 risks considered by executives in this year’s survey, risks linked to third parties increased the most from the prior year, moving from the 17th position last year to the fourth position for 2024.

Concerns over regulatory oversight have heightened for the near term. Regulatory risk took a dive during the COVID-19 pandemic as myriad other risk concerns were rated higher. The fifth-rated risk overall this year (up from 16th last year), this risk can hit an industry hard as well as have pervasive effects across industries.

Geopolitical events drive notable changes in risk perceptions. Based on the responses submitted prior to October 7, 2023, when events in Israel and Gaza suddenly erupted, no risks were rated at the “Significant Impact” level for 2024 (as defined by our survey methodology), whereas after this date four risks are rated at this level: economic conditions (including inflationary pressures), cyber threats, ability to attract and retain talent, and third-party risks.

Boards should consider the above risk themes and takeaways in evaluating their risk oversight focus for the coming year in the context of the company’s risks inherent in its operations. If senior leadership has not identified or prioritised these issues as matters to consider in managing the business going forward, directors should consider their relevance to the company’s strategy and ask why not.

Go deeper: Read more here.

(Board Perspectives — Issue 171)

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