SINGAPORE, November 21, 2024 — Only three in 10 (29%) key decision makers and the teams supporting them in Asia Pacific (APAC) believe their organisations will be able to respond adequately to risks that might emerge in the next 10 years; and only one in two respondents (48%) are confident their organisation’s approach enables it to respond to today’s risk environment, according to the Emerging and Interconnected Risks Survey published today by WTW (NASDAQ: WTW), a leading global advisory, broking, and solutions company.
The survey was designed by the WTW Research Network to take respondents through successive stages of thinking across four lenses using a new risk taxonomy of 48 risks across eight categories. Respondents were asked to consider the impact on their organisation of the risks of today (current emerging risks), of tomorrow (risks that will emerge over the next two years), of the future (risks that will emerge over the next 10 years) and the interconnectivity between those risks.
“None of the risks operate in isolation and organisations need to move away from a siloed approach to risk and rethink the narrative around risk.”
Luke Ware | Head of Corporate Risk & Broking, Asia WTW
Luke Ware, Head of Corporate Risk & Broking, Asia at WTW said: “We are witnessing a continual evolution of threats, which means we need a smarter way to think about risk. What is certain is that none of the risks operate in isolation and organisations need to move away from a siloed approach to risk and rethink the narrative around risk. Emerging risks are complex and carry unseen costs if they go uncontemplated. Hence, it is important to build an emerging risk process and link it to the business model, including through the lens of opportunity.”
Technology dominated the emerging risks agenda. While artificial intelligence (AI) and technology are expected to be greatest driver of change in the next 10 years, cyber risks and the future of technology are the top risks of today and tomorrow for organisations in APAC, and the joint top interconnected risk alongside economic outlook.
Geopolitical uncertainties have also accelerated shifts in global supply chains, leading to supply chain (23%) being the second most mentioned source of emerging risk in the region over the next two years by businesses, featuring either side of cyber risk (34%) and regulatory changes, workforce planning and effectiveness (20%).
“Geopolitical issues, natural catastrophe events, climate transition and people were top concerns today and tomorrow as organisations highlighted a wide range of emerging risks fostering volatility. These range from global elections to uncertainty leading to supply-side shocks, such as inflation and economic downturn, to the need for the right people in the right place, with the right skills and resources,” added Luke.
Continued amplification and acceleration of the environmental risk category dominated the longer-term view. Over the next 10 years, 53% of respondents in APAC said they expected climate change and climate transition risks to be a key source of change with wider mentions of effects on investments, impact of travel demand, crop production and regulation featuring alongside concerns of physical risk events. Organisations expect to see more frequent catastrophic events and are uncertain about what that future might look like.
When it comes to actionable insights, 35% of APAC respondents in the wider employee sample say that they have never been asked to feed into their organisation’s emerging risks evaluation. More than half (55%) were unable to specify the emerging risks that most concern their organisation, despite the majority being able to identify the top five changes they expect to see over the next two (93%) and 10 years (88%).
This suggests there is opportunity to enhance internal intelligence processes through structured approaches. Action is needed to connect institutional pockets of risk intelligence and ensure a coordinated approach across the organisation. Scenarios were seen as valuable ways (35%) for organisations to tell that story and determine the appropriate strategy.
“The ability to effectively manage risk is key to thriving in an uncertain world.”
Simon Weaver | Head of APAC and Head of Corporate Risk & Broking, APAC, WTW
Simon Weaver, Head of APAC and Head of Corporate Risk & Broking, APAC, WTW said: “The ability to effectively manage risk is key to thriving in an uncertain world. With regulators deepening their own exploration into emerging risks, investors asking more questions and organisations facing material financial consequences as risks evolve, there is a need for new approaches. We need more than data-informed decision making to explore the emerging risks shaping risk and opportunity. We need to focus on optimising risk outcomes. Smart specialisation, smart service, smart use of data and smart research. It all comes together to help navigate the complex risk landscape.”
The global survey report assesses the key emerging risks identified by over 330 respondents from 55 countries and proposes practical recommendations for organisations, considering improving their understanding of emerging risks. More than 120 of these respondents came from APAC and in organisations employing an estimated 581,000 people and creating $972 billion in revenue.
Three types of employees were consulted: senior leaders, teams supporting senior leaders and charged with implementing action and wider employees. Respondents from APAC come from 13 different industries, with a particularly strong representation from the transportation, financial institutions and natural resources sectors.
At WTW (NASDAQ: WTW), we provide data-driven, insight-led solutions in the areas of people, risk and capital. Leveraging the global view and local expertise of our colleagues serving 140 countries and markets, we help organizations sharpen their strategy, enhance organizational resilience, motivate their workforce and maximize performance.
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