Top Five Risk Mega Trends For 2024

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Top Five Risk Mega Trends For 2024

2023 has been a challenging year for firms across all industries, and it appears 2024 will be even more difficult. Managing risks has become an enormous task for executives and senior leadership, given the speed of market change, the complexity of emerging events and the increasing materiality of their impacts.

Throughout 2023, risk executives have had to confront and test the strength of their resilience programmes in response to a diverse array of events. These include post-pandemic economic impacts, extended natural disasters such as the wildfires, record high temperatures, rising social-political tensions with potential military consequences, cyber warfare and supply chain fragility.

In addition, governments are continuing to advance their regulatory agendas, adding more pressure on senior executives and businesses to meet new demands. Furthermore, reputation remains at constant risk due to the heightened scrutiny imposed by social media channels.

At Verdantix, we are closely monitoring the evolution of these market dynamics and the potential consequences for firms in 2024 and beyond:

  • Social and geopolitical risk, managing multiple crises. Regional conflicts across the world are expected to continue – or potentially intensify – impacting supply chain, commodities prices and political stability. Additionally, the social demands arising from the rising cost of living or environmental concerns are pushing politicians and policymakers to adopt more extreme political views, increasing ideological divides and adding greater pressure to the social agenda.

  • Polarized elections may create large market shifts. Around 40 countries will hold relevant elections that could have regional and global implications. Many elections will see candidates with polarizing viewpoints on geopolitical strategies, climate and ESG regulations, and social policies.

  • Economic uncertainty – a soft or hard landing? The battle against inflation hasn’t been won yet. Despite central banks approaching the end of the hiking cycle, the market consensus is that they will take a very cautious approach to reducing interest rates, keeping them above 3.5% - 4% during 2024. This will impact economic growth and add more economic pressure to households and businesses.

  • De-globalization versus re-globalization. Emerging economies and frontier markets are reorienting their commercial and political alliances from US and western multilateral institutions to China and other influential global players. This shift is disrupting traditional capital and goods flows, accelerating the race to secure access to key materials and political control over trade routes – even in regions far from organizations’ usual spheres of influence, forcing businesses to adapt to this new market reality.

  • Supply chain fragility to be exposed even further. Disruptions are occurring not only with goods but also with services, across regions and industries. Global events are impacting local businesses. Climate-related events, such as flooding and high temperatures, can disrupt the entire food supply chain or the availability of services. Additionally, social and geopolitical risk are expected to increase, threatening the delicate supply chain even more.

Daniel Garcia

Senior Manager

Daniel is a risk and compliance subject-matter expert (SME), with over 16 years of global experience, having worked for major financial institutions and consulting firms in Latin America, Europe and Asia. He leads the Verdantix Risk Management practice, where he steers market research intelligence and provides Advisory services on risk and compliance matters. Daniel has a BA in Economics and an MSc in Capital Markets and Financial Engineering.