Our sense of living in "unprecedented times" facing extraordinary challenges is amplified by growing globalized interconnectedness, rising uncertainty and fast evolving news cycles. Regardless of whether the world faces greater or more probable threats, we are almost certainly facing a continuous supply of emerging risks that require a smarter way to manage risk.
Several annual global risk reports find their way into your inbox each year. Each has its own viewpoints and recommendations on risk, but it is rare to find one devoted to emerging and interconnected risks across risk, people and capital. Our research uncovers how unprepared organizations feel in the face of the complex risk landscape and their need for enterprise-wide approaches to take action.
Whether you're a decision maker, at the operational forefront, or an interested citizen, understanding the emerging risks and opportunities on the horizon is essential for shaping a resilient and prosperous future. With regulators around the world deepening their own exploration into emerging risks, investors asking more and more questions, and organizations continually surprised by risks as they evolve, there is a need for new approaches. These stakeholders are starting to ask organizations to go beyond providing a list of key risks; they want to know the methodology, quantum of risk and how the board are taking action. Organizations need to be ready to answer.
This survey is the second evolution in finding a smarter way to emerging risks. Since our 2021 Emerging Risks Survey, the WTW Research Network has been recording the questions organizations want answers to.
Our survey report shares new insights from;
Taking action is essential. The complex risk landscape is not slowing down. The survey was open between May and October 2024, during which time the world experienced the earliest Category 5 storm on record (Beryl), a global technology outage (CrowdStrike), continuing conflict in Ukraine and the Middle East, the Baltimore bridge collapse and a year of elections as countries around the world voted on their political futures. Events once thought rare are becoming more likely, or occurring at scales previously not seen, leading organizations to reassess current approaches to ensure they can navigate today’s operating environment rather than being steered by it.
The momentous stakes of the wrong action — or worse, inaction and no recovery plan — require shared understanding, a unified strategy and recognition of how deeply connected the global economy is. With the world’s largest 100 organizations responsible for $17.7 trillion of revenue[2] (15% of global gross domestic product (GDP), expected to hit $115 trillion in 2024),[3] failure by any one of those organizations to identify and respond to emerging risks can cascade through the global financial system to your boardroom table. No organization is disconnected from the complex risk landscape, whether through international trade, ownership or end customers.
Your vulnerability could be an undiscovered supplier or underappreciated risk connection, as many organizations found with the Russia-Ukraine conflict. Ukraine’s economic output is now at a fraction of its pre-war levels,[4] research estimates a loss of $1.5 trillion GDP in 2022[5] and new losses emerge every day.[6] October 28, 2024, saw the announcement a Russian court was fining Google $20,000,000,000,000,000,000,000,000,000,000,000 ($20 decillion) for failing to comply with the requirement to restore Russian media accounts on YouTube.[7] While the fine is seen as symbolic it raises an important point.
Protection gaps are growing and new approaches are needed. The pandemic and ongoing global turbulence have left too many organizations struggling to find the right approach to prepare their organizations to emerging risks. It’s why putting an emerging risk framework in place is the top action organizations are looking to take in the next two years. The complex risk landscape has left them feeling vulnerable to a range of potentially damaging scenarios with financial consequences — failure to meet strategic targets, loss of revenue, shareholder value, bankruptcy, reputation damage — constraining the capital expenditures needed to tackle complex challenges and transform tomorrows.
To navigate through this complex world, we suggest organizations need to rethink their approach to emerging risks, be openminded, avoid concentrated risks, be sensitive to early warning signs, constantly adapt and always prepare for the worst to ensure they transform their tomorrows. WTW shares seven key findings to support this view:
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Emerging risks are not just interesting; they have very real impacts on business models and strategy. They are also every risk in our survey taxonomy. Every risk category has at least one risk in the top 10, highlighting how wide the risk agenda has become and the need to balance actual and perceived risk to make evidence-based decisions. Change is needed. Only one in two (50%) are confident their organization’s approach enables it to respond to today’s risk environment. This drops to two in 10 (23%) being confident their organization’s strategy will remain resilient to risks that might emerge in the next 10 years.
50% confident their organization’s approach enables it to respond to today’s risk environment
23% confident their organization’s strategy will remain resilient to risks that might emerge in the next 10 years …
02
The past few years have broadened the risk agendas of organizations, with continually fluctuating risks competing for the same resources. Our respondents shared 752 emerging risks prioritized by their organizations, along with rich perspectives on where they expect change to occur in the next two and 10 years. However, untapped insight is waiting to be harnessed. Forty percent of the wider employee respondents also feel they have never been asked to feed into their organization’s emerging risk process. One in two respondents (49%) was not able to share the emerging risks of most concern to their organization, despite the majority being able to prioritize a top five view of change over the next two (95%) and 10 years (90%) through our survey approach. Why? The top action organizations are planning to take in the next two years is building an emerging risk framework, so we suggest a lack of consistent approach is behind this — something WTW is currently helping organizations navigate and implement, from horizon scanning to analytics-led risk optimization.
49% not able to share the emerging risks of most concern to their organization
95% able to prioritize a top five view of change over next two years
90% able to prioritize a top five view of change over next 10 years
03
There are no surprises in the list of emerging risks shared — the surprise was organizations see everything as an emerging risk. This reality is why we continue to invest in research and partner with experts to bring fresh perspectives. None of the risks operate in isolation; organizations need to move away from a siloed approach to risk and rethink the narrative of risk.
Whereas climate comes in at the top in many other risk reports across the industry, technology is dominating the emerging risks agenda, with artificial intelligence (AI), cyber risks and the future of technology taking three of the four top risk views. This clear dominance of technology doesn’t mean the other risks are unimportant; the economic outlook is the most interconnected risk, geopolitics, climate transition and climate change are all in the top five emerging risks and continue to be an emerging source of change for organizations. Reviewing the interconnectivity and views shared on what is driving the top risk choices uncovers hidden blind spots that a risk-by-risk focus can miss. We explore six key themes that highlight these touchpoints:
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To ensure risks are actionable, organizations need an approach that supports value and not just giving stakeholders comfort through annual reporting that they are secure. From assigning board-level responsibilities to using a finance-led approach informing their risk tolerance, organizations are deploying a wide array of approaches covering governance and operational actions. There is good news: Those taking more consistent action are outperforming their peers, and more interestingly, they range from small to large and complex organizations. If you don’t have a large team or budget, you can still find a smarter way to risk.
05
Without appropriate and enterprise-wide consideration of emerging risks, organizations run the risk of not capitalizing on the expertise and insights within their organizations, failing to turn those risks into commercial opportunities and growth. Developing an emerging risk framework is the top action organizations are planning in the next two years (25%). Only four in 10 (37%) decision makers and risk respondents believe they currently have an emerging risk framework in place.
Equally important is the need to align risk management plans with risk appetite and tolerance. Even within the same industry, organizations may have vastly different abilities and appetites for volatility and risk; one may be more comfortable to retain risk, while another may elect to transfer, terminate or treat risk wherever possible. Which route makes the most sense for a given organization depends on that organization’s financial strength, culture and goals. A clear risk tolerance framework agreed by the top of an organization empowers people throughout the organization to make decisions within their authority and escalate those that merit a more senior audience.
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There has never been a better time to take a second look at your organization’s approach and explore which emerging risks your peers and other industries have identified. When discussing a topic, whether with one colleague or at a crowded boardroom table, does everyone understand what you do? We believe there is a gap, and to be effective, organizations would benefit from rethinking the narrative of risk and focusing on an approach that can bring risk management decision making and financial priorities together — starting with revisiting the definition your organization uses.
The range of reasons why AI found its way to the top of the emerging risk list highlights the need to move beyond maintaining a risk list by broadening discussions. Of the 36 different descriptions shared, some highlight the overall topic (i.e., AI), while others focus on specific aspects, including talent flight risk if they trained staff in generative AI (genAI), misinformation, potential to compound cyber risks, needing to develop new internal policies and changes in lifestyle that could follow with AI adoption. Reviewing emerging risks and being future-ready is about more than maintaining a risk register or scoring acceleration, impact and severity; harnessing the full potential requires a deeper discussion.
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Today’s challenges require not only working hard but also working smart to find the optimal strategies that work for your organization. Just as no risk operates in isolation, leaders increasingly need to have a wider understanding of impacts beyond their function — that requires shared understanding and an approach that brings risk management decision making and financial priorities together. We believe this is why scenarios were highlighted as more useful than data to determine appropriate response strategies. Using “storylines” — consistent narratives of plausible future events — helps us understand and manage complex risks. Transparency around process and methodology, with a common language, is essential to ensure a modernized portfolio risk management strategy is aligned with your organization's overall objectives.[8] There has never been a better time for organizations to take action on these findings to ensure their storylines turn risks into opportunities.
We propose four practical actions for organizations to consider as they ask questions of their strategy to navigate the complex risk landscape:
We combine findings from the survey with further insights from global research and WTW leaders across industry, people, risk and capital to explore what your tomorrow will look like.
Will it be smarter? More flexible? Will it put you on the pathway to success? Will it allow your people to live the lives they want, now and in the future? Will you take more risks? See more opportunities?
These are the questions that drive us. At WTW, we've been helping smart people creatively solve their people, risk and capital challenges for almost two centuries because, with the right partnership and perspective, your tomorrow has endless possibilities. For a smarter way to turn risks into opportunities, explore the risk alerts and action plans across the survey report and get in touch with our specialists.
