Control Risks publishes annual RiskMap forecast for business community

The Top Risks for 2022 from the leading specialist risk consultancy cover political and security risk across the globe in tandem with terrorism, cyber, operational and reputational risk.

There are three key takeaways from the forecast. First, nation states can no longer adequately protect their own institutions, let alone their economies, against cyber threats. According to Control Risks, the exponential proliferation of hostile threat actors and an infinitely expanding attack surface is just too big to cover effectively. Put simply, businesses and organisations will have to defend themselves.

Second, the geopolitical ‘comfort zone’ of the past 70 years, such as it was, has been “unmoored and set adrift” by the US withdrawal from Afghanistan. The world will start to spin differently in 2022, suggests Control Risks, but no-one is yet sure as to how, or who will dominate a new global system.

Third, extreme weather and natural hazards caused by climate change are so frequent that neither countries nor companies can no longer respond on an event-by-event basis. Adapting to – and managing – the climate crisis needs to be at the centre of every company’s global strategy.

Red and amber lights 

“Looking towards 2022, the opportunities for growth can be found in abundance but, at the global level, red and amber lights continue to flash on the risk register dashboard,” commented Nick Allan, CEO at Control Risks.

The Top Risks also cover the security challenges posed by the growing number of fragile and dysfunctional states, a freshly fragmented terrorist threat and the reputational risk of inadequate responses to environmental, social and governance (ESG) issues. 

“Across many of the risks in 2022, it’s clear that, whether your focus is cyber, climate change, geopolitics or terrorism, we are in a period of transition and it’s not yet clear how far we have to go in many areas,” added Allan.

Top Risks for business in 2022

*Political Risk: The grand geopolitical repositioning 

In 2022, businesses will need to monitor and manage geopolitical risk more closely than has been the case for several years. The grand geopolitical repositioning will see world players redefine not just what they stand for, but also where and how they make that stand.

Alliances and alignments will be in play. For business, this will touch everything. From securing energy supplies, ensuring supply chain resilience and achieving sustainability through to providing values-based leadership, guaranteeing security and accelerating growth out of the pandemic, there’s no doubt that geopolitics will shape the opportunities and risks at play on all fronts. 

*Security Risk: The rise of dysfunctional, fragile and vulnerable states

The foremost security risk for businesses in 2022 comes from the global rise of dysfunctional, vulnerable and fragile states. Across the world, the COVID pandemic diminished capacity to absorb and manage external shocks and internal challenges.

Political and institutional fragility in the global South will continue to play out in conflict, state failure, coups and economic meltdowns. In the prosperous North, social unrest, radical activism and rising criminality among traditionally stable economies will present a challenging security environment. 

*Terrorism Risk: COVID-19 and the Taliban drive diverse terrorist threats

Terrorism in 2022 and beyond will be shaped by two major developments: the COVID pandemic and the Taliban takeover of Afghanistan. These two developments pose different kinds of threats, but both contribute towards an increasingly diverse threat landscape.

The disruption of COVID has served to aggravate grievances and divisions, subsequently driving conflict, terrorism and violent extremism. The crisis has also weakened Government counter-terrorism efforts.

After the Taliban takeover, the main risk in 2022 is that Afghanistan becomes a safe haven for internationally minded terrorist groups.

*Cyber Risk: Business versus a world of unchecked cyber threats 

In 2022, escalating cyber threats globally become a matter of survival for organisations. For businesses, ownership of the defence against these threats is brutally clear: they are on their own.

States are failing to deter aggressive behaviour as offensive cyber capabilities proliferate among growing numbers of state and non-state actors. Added to this is the rapidly advancing trend of collaboration between states and cyber criminals. With insurers questioning the viability of covering disruptive cyber events, businesses are now looking at a world where the ownership of cyber risk is unclear. 

*Operational Risk: Brace for the cutting edge of climate change 

Natural hazards and extreme weather caused by climate change will be the main operational risk facing organisations in 2022. This risk includes an almost unlimited number of stakeholders and intense scrutiny of how businesses manage – or fail to manage – the risk.

The pressure on business to play its part in tackling climate change is real, while the need to be ready for its impacts is critical. 

2022 is the time to adapt, gain competitive advantage, survive and even thrive. The message is clear: choose to ignore it and suffer the consequences. 

*Reputational Risk: Stumbling in the ESG stampede 

In 2022, the risks of an ESG ‘misstep’ will pile up as pressure to score in sustainability indices collides with a general public that’s on sharp alert against greenwashing. 

Next year, companies need to focus on three things: hyper-investment in ESG activities, measuring impact, not just policies and also not losing sight of social and governance issues alongside the headline-grabbing climate risk. 

For every company that asks whether ESG is nothing more than the latest fad or corporate buzzword, the answer is, resolutely, ‘No’.