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2023 Risks

As we head into 2023 the Risk landscape will continue to change, and we can use the here and now to get a shape of what’s to come. I look at this in 4 key pillars as a risk to companies globally:
  1. Geopolitical
  2. Security
  3. Operational
  4. Cyber
Geopolitical
We can see from the effects of 2022 and predict that Geopolitical Risk will feature across the board. We only need to look at the Russian War on Ukraine, or the unbalanced  Political relationship between the US and China.
With weakened countries building relationships with stronger Governments worldwide, we can expect some posturing, resulting in financial levies being implemented by the Government placed out in the cold which impacts their political strategy.
Geopolitical risks refer to the potential negative impacts on an organization, or country that can result from the interaction between political, economic, and geographic factors. These risks can be global in nature, affecting multiple countries and regions, or they can be more specific and localised to a particular region or country. Some examples of geopolitical risks include:
  1. Military conflict or political instability in a particular region or country
  2. Changes in government policies or regulations that can affect trade or investment
  3. Changes in the balance of power between countries or regions
  4. Natural disasters or climate change-related events that can disrupt economic activities
  5. Changes in the price or availability of natural resources
Geopolitical risks can have significant impacts on businesses, particularly those that operate in different countries or regions around the world. For example, a company that relies on imported raw materials from a particular country may be vulnerable to disruptions in the supply chain if that country experiences political instability or economic turmoil. Similarly, a company that does business in a region that is prone to natural disasters may be at risk of financial losses if its operations are disrupted by such events. It’s important for businesses to stay informed about geopolitical risks and to have contingency plans in place to mitigate potential impacts.
Security
Global companies face a range of security risks that can affect their operations and bottom line. Some common security risks faced by global companies include:
  1. Cyber-attacks: Hackers or other malicious actors may attempt to access, manipulate, or steal sensitive information or disrupt business operations through cyber-attacks.
  2. Physical security: Companies with operations in different countries may face risks related to crime, terrorism, or other threats to the safety and security of their employees, assets, and facilities.
  3. Supply chain disruption: Companies that rely on global supply chains may be vulnerable to disruptions caused by factors such as natural disasters, political instability, or changes in trade policies.
  4. Intellectual property theft: Companies may face risks related to the theft or unauthorised use of their intellectual property, including trade secrets, patents, trademarks, and copyrights.
  5. Data breaches: Companies that collect and store sensitive personal or financial information may be at risk of data breaches, which can result in financial losses, damage to reputation, and regulatory penalties.
It’s important for all companies to have robust security measures in place to protect against these and other risks, and to have contingency plans in place to minimise the impacts of any security incidents. This may include measures such as security training for employees, processes to ensure business continuity, and insurance to cover financial losses.
Operational
Operational risks refer to the potential for losses or negative impacts on a business that can result from the day-to-day operations of the organisation. These risks can be internal, meaning they arise from within the organisation, or external, meaning they arise from factors outside the organisation. Some common examples of operational risks faced by businesses include:
  1. Process failures: Breakdowns or errors in internal processes or systems that can disrupt business operations and/or lead to financial losses.
  2. Human error: Mistakes made by employees, contractors or vendors that can have negative consequences for the business.
  3. Regulatory compliance: Companies that operate in regulated industries may face risks related to non-compliance with laws and regulations, which can result in financial penalties, legal action, and damage to reputation.
  4. Supply chain disruptions: Disruptions in the supply chain, such as delays or shortages of raw materials, can affect the ability of a company to produce and deliver goods or services to customers.
It’s important for businesses to identify and assess their operational risks and to put measures in place to mitigate or manage these risks. This may include implementing robust internal processes and controls, investing in infrastructure and security, and establishing contingency plans to ensure business continuity in the event of disruptions.
Moving forward we need to be more flexible and agile to change, the world of risk continues to evolve and to stay ahead of the risks and impacts to organisations.
This is a wake up call for organisations globally to understand that ‘Risk Management’ needs to be part of your strategy, otherwise above the line you will be making great decisions eroded by the invisible impacts.
Cyber Risk
Cyber risk is a formidable method in this modern world which is now become a weaponisation and are on a higher risk scale
Cyber-attacks can take many forms, including malware, phishing, ransomware, and denial of service attacks, and can be launched by hackers, cybercriminals, or even nation-states. Cybersecurity risks can have significant consequences for organisations, including:
  1. Financial losses: Can result in the theft of sensitive financial information, such as credit card or bank account numbers, or the loss of funds through unauthorised transactions.
  2. Damage to reputation: A cyber-attack can damage a company’s reputation or brand image, leading to a loss of customer trust and loyalty.
  3. Legal consequences: Companies may face legal action or regulatory penalties if they fail to protect sensitive customer or employee data from a data breach.
  4. Disruption of operations: Cyber-attacks can disrupt business operations, leading to lost productivity and revenue.
It’s important for organisations to take steps to protect themselves against cybersecurity risks. This may include implementing strong passwords, installing antivirus software, and training employees on cyber security best practices. It’s also a good idea to have contingency plans in place in case of a cyber-attack, including backup systems and processes to ensure business continuity.