The Marsh McLennan Global Risks Report 2024 captures insights from nearly 1,500 business leaders and experts worldwide, providing a
short-, medium- and longer-term perspective on unfolding risk to help organisations make informed, data-led decisions. Empowered by
perspective from the annual research, now in its 19th year, leaders can take an informed, holistic approach to weathering crises, managing threats, and building long-term resilience.
The threats to business operations in today’s world are complex and must be taken on a whole-picture level. Climate change, geopolitical risk, cybercrime – turbo-sped by emergent AI technologies – and economic turbulence are holistic and interconnected. Understanding the impact will empower businesses to either take advantage of these risks or prepare for these risks by building more resilience into their entities.
A key call to action of 2024’s Global Risks Report is for leaders to strike the critical balance between risk facing them now, as well as those threats coming further down the line. The second is to meet the interconnected threats with an interconnected approach; collaboration between government and the private sector will help balance uncertainty, risk investment decision-making and build long-term resilience.
A newcomer to the top ten global risks list that has surprised some of the report’s audiences this year is misinformation, sitting as the number one overall risk. When a population’s opinions are increasingly polarised, they are more likely to trust misinformation, as they seek out whatever evidence confirms their own beliefs. It means that manipulative narratives infiltrate the public conversation and are adopted as fact. In addition to the public being divided, its trust in what were institutions once looked to as sources of truth is also in decline.
At the time of writing the report, only 41% of Kiwis trust the country’s media, barely half (51%) trust government, and business is trusted by only 58%, the Edelman Trust Barometer for New Zealand found. This has potentially serious implications for crucial issues, such as the legitimacy of election results and public safety messaging – even the concept of truth itself. How can a business or government communicate to the population, if as little as half of the public will believe it? If there’s distrust in business, what’s the cost for a business's brand and believability of its services? The risk is in the delay time between accepting things we know to be true and our preparedness to decide and respond.
Having barely had the chance to take a breath since the pandemic, companies across the nation are buffeted by the latest hits on global supply chains by way of shipping disruptions and interstate conflict. According to commentators, the crisis is the worst in 50 years, driven by geopolitical factors including Middle East proxy wars and the ongoing Russia-Ukraine conflict. These amount to a significant impact on resource prices and availability, while shipping disruptions in the Red Sea are fuelling cost of operations, lost contracts and surging cost of goods. Closer to home, China-Taiwan tensions continue to pose a looming potential threat to critical technology components in the supply chain.
Natural catastrophes and extreme weather events such as floods continue to pose risks to human life, infrastructure and economic stability, with the report highlighting food exports as particularly vulnerable in key regions, New Zealand being among those named. Immediate impacts include a reduction in agricultural productivity and simultaneous harvest failures. With losses reaching billions of dollars, the impact of extreme weather events can no longer be solely shouldered by traditional risk transfer measures and require a multi-pronged approach. Locally, it is increasingly crucial for the public sector, government and the business community to collaborate on mitigation and adaptation measures. In the longer term, environmental factors could radically impact insurability and food security in the next decade, the report also warns.
AI technology is the subject of both fascination and massive concern; namely that the sheer speed of its advance and uptake is outpacing governments’ and organisations’ ability to adapt. For a breadth of industries, AI presents significant opportunity. It can boost productivity and cost savings by streamlining admin tasks, reducing human error, enabling faster scalability, and can analyse complex data at speeds that were unthinkable even half a decade ago.
At the same time, construction of the foundational AI models which underpin the tools currently available for public use, rests in the hands of a small circle of tech players which largely operate with a lack of transparency. This poses problems for risk managers and insurers to assess risk and implement safety measures. Meanwhile, AI technology is a boon for cybercriminals, helping them streamline their nefarious activities – with faster and more targeted automated attacks, mass phishing emails, quantum-speed password or data decryption and sophisticated deep-fake attacks. These pose risks to trade secrets, health data and critical infrastructure.
A considered approach to deployment of AI, both by corporations and governments, which harnesses its benefits while controlling for vulnerabilities with checks and balances, will be one of the headline themes for the coming years.
