As emerging risks continue to evolve, it’s important for companies to keep themselves up-to-date on the latest trends and have a plan in place to mitigate emerging risks that may become material to the business.
Risk leaders within our network have been discussing how to collect information about potential threats and opportunities to effectively monitor emerging risks. As highlighted by our Emerging Risk Maturity Framework, members agree that an optimised approach to monitoring emerging risk information involves capturing both qualitative and quantitative data to identify and provide an understanding of key trends.
To enable this optimised approach to understanding macro trends, it can help to review the emerging risks other companies are monitoring and reporting on.
To read more on emerging risk, take a look at our feature-length guide: Emerging Risks: How are businesses managing their blind spots?
Based on data from Risk Leadership Network's Horizon Scanning Tool, which pulls information on emerging risks from company annual reports, as well as reports issued by global institutions such as the World Economic Forum and the European Commission, we have identified some of the major emerging risks businesses are currently focusing on (as of 26 January 2023).
While we specifically used data from 2022 reports for the purposes of this article – capturing the emerging risk landscape as it exists in January 2023 – the tool also includes data from 2019, 2020 and 2021, highlighting the evolution of emerging risks over time.
Download our sunburst chart of the top 10 emerging risks reported in 2022, including a specific breakdown of the individual sub-risks that sit beneath each type of emerging risk.
Below, we have summarised key findings from our review of the latest data. While the list of top emerging risks remains broadly the same as previous years, there are still useful insights to gleam from the latest set of company and industry reports.
Technology remains the most reported emerging risk
Given the innovative and evolving nature of technologies, as well as the speed at which new developments accelerate, it is unsurprising that technology continues to be the most reported emerging risk category by companies and industry bodies in recent reports.
However, a breakdown of sub-risks under this category of technology reveals some notable changes between 2021 and 2022. For example, the number of companies focusing on new technologies as an emerging risk has once again increased, now accounting for about a quarter of all tech-related emerging risks reported; in 2021, it was roughly 18%.
This trend may be driven by increasing attention toward transversal technologies like AI, big data and the metaverse, all of which look likely to change how companies operate in the future; some retail businesses, for instance, are using AI to make it easier to engage with their customer, from automated help desks to tailored advertising. However, does this run the risk of alienating customers and making the relationship with the consumer too impersonal?
Rise in geopolitical risks reported
One thing that hasn’t changed between 2021 and 2022 is the significant interest in geopolitical risk and, more specifically, geopolitical instability. In the case of the Russia-Ukraine war, that instability (among other global events) has clear knock-on effects for businesses – from supply chain complications to rising fuel prices.
The impact of geopolitical instability is borne out elsewhere in the data, with the number of mentions for sub-risks of geoeconomic tensions and war/conflict doubling in 2022 compared to 2021 reports.
There are other geopolitical events driving this growth too, such as the ongoing political friction and trade tensions between the US and China, as well as political upheaval in South America.
Climate change, environment and sustainability still important
While i) climate change and ii) environment & sustainability are two separate emerging risks under our taxonomy, both were among the top emerging risk categories in 2022.
Compared to 2021, climate change has been mentioned in more company reports, highlighting an increased focus on climate risk. With TCFD disclosures now mandatory for listed businesses in the UK – and other jurisdictions set to introduce similar requirements – this trend is likely to continue.
Under the emerging risk category of environment & sustainability, ESG has also become a much bigger focus for companies in 2022 – since 2021, mentions of ESG have tripled. As customers and stakeholders place greater expectations on companies to meet sustainability targets, ESG will likely begin to transform into a material risk for more organisations.
Other key emerging risks and trends
Between 2021 and 2022, several other emerging risks have also entered the frame, getting more attention from businesses. For example, societal change has grown in importance in tandem with the increased focus on sustainability; this is because there is growing consumer awareness of what is (and is not) good for the environment, influencing customer decisions.
Another emerging risk that has received a lot more attention from organisations in 2022, when compared to data from the previous year, is supply chain – it was mentioned in 29 reports in 2022, up from just 12 in 2021. Several members across our network have been collaborating and sharing their approaches to scenario planning for supply chain disruption, as a result of major geopolitical events of 2022.
The final emerging risk category that more companies reported on in 2022 is macroeconomic risks – according to our data, this has been driven, in particular, by the rising prominence of risk factors such as economic volatility and inflation.
Want to find out more about our Horizon Scanning Tool?
Members of Risk Leadership Network are using the Horizon Scanning Tool to validate and develop their emerging risk registers, identify key trends and understand what emerging risks companies within and outside of their sector are reporting. This benchmarking and trend analysis, displayed in an interactive dashboard, is equipping risk teams with the tools needed to enhance their emerging risk management.
For an in-depth one-on-one demonstration of the Horizon Scanning Tool, please click here.