Clyde & Co has published the second instalment of its 2024 corporate risk radar, which provides insights into the challenges business leaders face in a volatile risk environment.
The first part, released in June, explored the "polycrisis" confronting leaders, including prolonged economic instability, geopolitical tension, and the disruptive influence of artificial intelligence (AI).
According to the latest findings, 43% of business leaders view regulatory scrutiny as a growing operational threat due to the increasing number of new initiatives and a perceived lack of clarity and consistency in these regulations.
People-related challenges rank as the second-largest high-impact risk, with 58% of leaders identifying it as a threat to multinational operations. Meanwhile, climate change has dropped in the global risk hierarchy from sixth in 2023 to ninth, reflecting the increased urgency of other factors.
Cyber threats remain the most significant technological risk, with 76% of respondents identifying it as their top concern. However, for the first time, 29% of business leaders also highlighted disruption caused by AI as a high-impact risk.
Commenting on the evolving risk landscape, Eva-Maria Barbosa (pictured above), partner at Clyde & Co in Munich, noted that risk discussions have become more comprehensive over the past decade.
“Every element of liability is on the table, being discussed up front. On arriving in a new country, companies now have detailed exit plans clearly articulating how they might exit a jurisdiction in years to come, if the risks are too great. Inevitably, there’s going to be a certain amount of ‘Keep calm and carry on,” Barbosa said.
Barbosa also acknowledged that while businesses cannot immediately reverse large investments, understanding and planning for risks is crucial.
Helen Bourne, partner at Clyde & Co in London, also addressed the issue of cyber security, particularly in the context of hybrid working and remote technology.
“The best way for organisations to counter this and build security and resilience is to train its people well enough to gain sufficient awareness of the likely threats in order that they can then detect and report them quickly and effectively,” Bourne said.
Roshanak Bassiri Gharb, partner at Clyde & Co in Dubai, spoke about the shifting investment landscape in the Middle East. She observed that while international investment in the region has decreased slightly, this has created opportunities for Middle Eastern investors to pursue outbound investments.
“To the Middle East, all the risks that are unfolding in other regions are opportunities as we are relatively untouched by the political turmoil in the US, France or the UK,” Gharb said.
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