The business world is always changing, and staying ahead of potential risks is crucial for any organization. Gartner's 2Q24 Emerging Risks Report sheds light on the most significant threats that companies could face in the near future. From technological advancements to political shifts, understanding these risks can help businesses prepare and adapt. Here’s a breakdown of the key findings from the report.
1. Technological Risks: The Double-Edged Sword of AI
AI-Enhanced Malicious Attacks
Artificial intelligence (AI) is a powerful tool, but it also brings new risks. AI-enhanced malicious attacks are becoming more common as cybercriminals use AI to make their attacks smarter and harder to detect. These attacks can quickly adapt to a company's defenses, making them more dangerous than traditional cyber threats.
Why It Matters: These attacks can cause severe disruptions to business operations, damage a company’s reputation, and lead to significant financial losses.
How to Prepare: Businesses should invest in advanced cybersecurity measures and continuously train their staff to recognize and respond to these evolving threats.
AI-Assisted Misinformation
AI isn't just being used for attacks—it’s also being used to spread misinformation. With AI tools, fake news and misleading information can be created and spread more easily than ever, potentially damaging an organization’s reputation or leading to misguided actions.
Why It Matters: Misinformation can spread faster than companies can respond, leading to internal confusion and external reputation damage.
How to Prepare: Companies need to have strong communication strategies and invest in tools that can detect and counter misinformation.
2. Political Risks: Navigating an Uncertain Landscape
Escalating Political Polarization
Political divisions are growing, and this polarization can lead to instability and unpredictable regulatory changes that impact businesses. Companies operating in politically sensitive regions need to be especially cautious.
Why It Matters: Political instability can disrupt markets, change regulatory environments overnight, and even lead to physical threats in extreme cases.
How to Prepare: Companies should monitor political developments closely, engage in government relations proactively, and have contingency plans in place for potential disruptions.
New Geopolitical Partnerships
Changes in global alliances can alter trade dynamics and regulatory requirements. Staying informed about these shifts is crucial for businesses that operate internationally.
Why It Matters: New partnerships can lead to unexpected trade restrictions or opportunities, impacting supply chains and market access.
How to Prepare: Building flexible supply chains and maintaining strong local partnerships can help mitigate these risks.
3. Economic Risks: Preparing for Financial Fluctuations
Market Effects from Higher Borrowing Costs
With central banks raising interest rates to combat inflation, borrowing costs are increasing. This shift can strain budgets and limit the financial flexibility of businesses.
Why It Matters: Higher borrowing costs can reduce available capital for growth and increase the cost of existing debt.
How to Prepare: Companies should focus on managing their cash flow effectively, exploring alternative financing options, and refinancing existing debt where possible.
Stagflation Expectations
Stagflation—a combination of stagnant economic growth and high inflation—is a challenging scenario for businesses. Managing costs while driving growth becomes much harder in such an environment.
Why It Matters: Stagflation can lead to squeezed profit margins and reduced consumer spending, impacting overall business performance.
How to Prepare: Diversifying revenue streams and focusing on cost control can help businesses navigate these tough economic conditions.
4. Talent Risks: Aligning Skills with Business Needs
Misaligned Organizational Talent Profile
As companies evolve, there’s a risk that their workforce's skills may not keep up with changing business needs. Ensuring that employees have the right skills for the future is essential for maintaining competitiveness.
Why It Matters: A misaligned talent profile can lead to decreased productivity and challenges in executing strategic goals.
How to Prepare: Regular skills assessments and investing in upskilling and reskilling programs can help align the workforce with future needs.
Employee Misuse of AI
With AI tools becoming more accessible, there’s a growing risk that employees might misuse these technologies, either intentionally or unintentionally, leading to data breaches or compliance issues.
Why It Matters: Misuse of AI can result in legal problems and damage to a company’s reputation.
How to Prepare: Establishing clear guidelines on AI use and providing training can help prevent misuse.
5. Climate and ESG Risks: Adapting to Environmental Challenges
Extreme Heat Consequences
As extreme weather events become more frequent, they pose risks to both outdoor and indoor operations. This can affect employee health, reduce productivity, and disrupt business continuity.
Why It Matters: Heatwaves can increase operational costs, disrupt supply chains, and even result in regulatory fines for non-compliance with environmental standards.
How to Prepare: Companies should invest in climate-resilient infrastructure and adopt sustainable practices to mitigate these risks.
Climate Activism
Growing awareness and activism around climate issues can affect a company’s reputation and lead to increased regulatory scrutiny. Businesses need to be proactive in addressing climate risks to avoid potential backlash.
Why It Matters: Climate activism can lead to boycotts, regulatory penalties, and loss of customer trust.
How to Prepare: Enhancing sustainability efforts and communicating transparently about these initiatives can help build trust and reduce risks.
Conclusion
Gartner’s 2Q24 Emerging Risks Report highlights the complex and interconnected nature of the risks facing businesses today. By understanding these risks and preparing accordingly, organizations can navigate uncertainties and turn potential threats into opportunities. Staying informed and agile will be key to maintaining resilience and achieving success in a rapidly changing world.
Data Source: Gartner 2Q24 Emerging Risks Survey.
AI-Enhanced Malicious Attacks
Artificial intelligence (AI) is a powerful tool, but it also brings new risks. AI-enhanced malicious attacks are becoming more common as cybercriminals use AI to make their attacks smarter and harder to detect. These attacks can quickly adapt to a company's defenses, making them more dangerous than traditional cyber threats.
Why It Matters: These attacks can cause severe disruptions to business operations, damage a company’s reputation, and lead to significant financial losses.
How to Prepare: Businesses should invest in advanced cybersecurity measures and continuously train their staff to recognize and respond to these evolving threats.
AI-Assisted Misinformation
AI isn't just being used for attacks—it’s also being used to spread misinformation. With AI tools, fake news and misleading information can be created and spread more easily than ever, potentially damaging an organization’s reputation or leading to misguided actions.
Why It Matters: Misinformation can spread faster than companies can respond, leading to internal confusion and external reputation damage.
How to Prepare: Companies need to have strong communication strategies and invest in tools that can detect and counter misinformation.
2. Political Risks: Navigating an Uncertain Landscape
Escalating Political Polarization
Political divisions are growing, and this polarization can lead to instability and unpredictable regulatory changes that impact businesses. Companies operating in politically sensitive regions need to be especially cautious.
Why It Matters: Political instability can disrupt markets, change regulatory environments overnight, and even lead to physical threats in extreme cases.
How to Prepare: Companies should monitor political developments closely, engage in government relations proactively, and have contingency plans in place for potential disruptions.
New Geopolitical Partnerships
Changes in global alliances can alter trade dynamics and regulatory requirements. Staying informed about these shifts is crucial for businesses that operate internationally.
Why It Matters: New partnerships can lead to unexpected trade restrictions or opportunities, impacting supply chains and market access.
How to Prepare: Building flexible supply chains and maintaining strong local partnerships can help mitigate these risks.
3. Economic Risks: Preparing for Financial Fluctuations
Market Effects from Higher Borrowing Costs
With central banks raising interest rates to combat inflation, borrowing costs are increasing. This shift can strain budgets and limit the financial flexibility of businesses.
Why It Matters: Higher borrowing costs can reduce available capital for growth and increase the cost of existing debt.
How to Prepare: Companies should focus on managing their cash flow effectively, exploring alternative financing options, and refinancing existing debt where possible.
Stagflation Expectations
Stagflation—a combination of stagnant economic growth and high inflation—is a challenging scenario for businesses. Managing costs while driving growth becomes much harder in such an environment.
Why It Matters: Stagflation can lead to squeezed profit margins and reduced consumer spending, impacting overall business performance.
How to Prepare: Diversifying revenue streams and focusing on cost control can help businesses navigate these tough economic conditions.
4. Talent Risks: Aligning Skills with Business Needs
Misaligned Organizational Talent Profile
As companies evolve, there’s a risk that their workforce's skills may not keep up with changing business needs. Ensuring that employees have the right skills for the future is essential for maintaining competitiveness.
Why It Matters: A misaligned talent profile can lead to decreased productivity and challenges in executing strategic goals.
How to Prepare: Regular skills assessments and investing in upskilling and reskilling programs can help align the workforce with future needs.
Employee Misuse of AI
With AI tools becoming more accessible, there’s a growing risk that employees might misuse these technologies, either intentionally or unintentionally, leading to data breaches or compliance issues.
Why It Matters: Misuse of AI can result in legal problems and damage to a company’s reputation.
How to Prepare: Establishing clear guidelines on AI use and providing training can help prevent misuse.
5. Climate and ESG Risks: Adapting to Environmental Challenges
Extreme Heat Consequences
As extreme weather events become more frequent, they pose risks to both outdoor and indoor operations. This can affect employee health, reduce productivity, and disrupt business continuity.
Why It Matters: Heatwaves can increase operational costs, disrupt supply chains, and even result in regulatory fines for non-compliance with environmental standards.
How to Prepare: Companies should invest in climate-resilient infrastructure and adopt sustainable practices to mitigate these risks.
Climate Activism
Growing awareness and activism around climate issues can affect a company’s reputation and lead to increased regulatory scrutiny. Businesses need to be proactive in addressing climate risks to avoid potential backlash.
Why It Matters: Climate activism can lead to boycotts, regulatory penalties, and loss of customer trust.
How to Prepare: Enhancing sustainability efforts and communicating transparently about these initiatives can help build trust and reduce risks.
Conclusion
Gartner’s 2Q24 Emerging Risks Report highlights the complex and interconnected nature of the risks facing businesses today. By understanding these risks and preparing accordingly, organizations can navigate uncertainties and turn potential threats into opportunities. Staying informed and agile will be key to maintaining resilience and achieving success in a rapidly changing world.
Data Source: Gartner 2Q24 Emerging Risks Survey.
Author
Dr. Gilberto Crespo is an information security researcher & technology expert. He has been working for more than 24+ years in the information technology industries, cybersecurity, financial, higher education, and life coaching. He is also a motivational and leadership speaker.
