As highlighted in the 2023 Global Risks Report (GRR), the rising cost of living is seen as the most severe risk for the coming two years. This is also true within the Middle East and North Africa with business executives in the UAE and Saudi Arabia in consensus that the cost of living crisis is the number one concern. Though it is viewed as a short-term threat, if it persists, the resulting economic pressures could lead to increased social unrest and political instability. Rapid and/or sustained inflation ranks high as well. With inflationary pressure in many countries, economic risks are the primary concern for business executives.
Among the top five risks for 2023, according to Global Risks Perception Survey respondents, is cyberattacks on critical infrastructure. In the longer term, widespread cybercrime and cyber insecurity is a top-10 risk. By 2025, the total cost of cybercrime will be around $10.5 trillion globally, according to Cybersecurity Ventures.
Given these threats, organizations should refocus their risk management and resilience approaches to simultaneously prevail over today’s crises and prepare for future risks. By thinking creatively and collaboratively about risk, businesses, governments, and societal stakeholders can develop effective structural and long-term resilience. Resilience investments are not a drag on corporate growth, but an enabler. In that sense, a resilience mindset needs to become more deep-rooted.
Investments in resilience strategies and solutions should cover common capabilities that can address multiple risks. By focusing on resilience strategies that position organizations and the world to better tackle short and long-term risks, we can reduce uncertainties and make better decisions about where to invest limited resources.
Risk resilience at the executive, board and risk manager levels emphasizes proactively making better risk-based decisions, rather than reacting to crises or events. Critical questions for organizations in 2023 include:
At its core, risk resilience should be actionable and may require an organization to expand its toolset, including reinforcing, augmenting and delivering new metrics. It should centre around a mindset that accounts for how risks interact, potentially “compounding” one another.
Resilience in today’s compounding risk and “polycrisis” environment requires dynamic measurements and actions. This means tracking evolving global risk trends and strategic emerging threats to understand how they may impact people, supply chains and more. It means active engagement across the organization, not just by risk professionals, to prepare for major environmental, economic, industrial and social transformations. Furthermore, it must include measures across technology, finance, human resources, operational processes, stakeholders and more.
While many firms, with an eye to a global economic downturn, are tightening their belts, the most strategic leaders are scoping out the scenarios that may lie beyond and examining how well their plans stack up against each. Only bold thinking and a fulsome commitment to preparedness will keep their businesses sharp in a world where the next flashpoint is barely over the horizon.