Macroeconomic, geopolitical conditions pose severe risks to organisations: Survey

With the world facing growing economic instability and political tensions, volatility in geoeconomic and geopolitical relations between major economies is likely to result in global upheavals over the next six months, a new survey showed on Thursday.

According to the survey of the World Economic Forum's Chief Risks Officers community, more than 85 per cent of CROs expect some level of continued volatility and economic and financial conditions within and across major economies.

Armed conflicts and regulatory changes are also cited as potential threats to organisations, while over 75 per cent of CROs believe the use of AI technologies poses reputational risks to their organisations.

The community comprises 40 risk professionals from a wide range of multinational companies, covering technology, financial services, healthcare, professional services and industrial manufacturing.

Respondents to the survey identified macroeconomic indicators, pricing and supply disruptions of key raw materials, armed conflicts and regulatory changes as top concerns for organizations.

"CROs are facing a multitude of pressing concerns as they look to the remainder of 2023," said Ellissa Cavaciuti-Wishart, Head of Global Risks Initiative, WEF.

While continuing to grapple with rising costs and supply disruptions, organisations are increasingly faced with a number of ethical and societal risks, which are far more complex to navigate than regulatory compliance alone, said Geneva-based WEF, which describes itself as an international organisation for public-private cooperation.

Recent months have also seen a sharp increase in discussion of technology-related risks.

CROs broadly agree that risk management is not keeping up with the rapid development and deployment of AI technologies, with 75 per cent saying the use of AI technologies poses reputational risks to their organizations and 90 per cent calling for an acceleration of regulation.

Almost half of the respondents agree with slowing or pausing the development of these technologies until the associated risks are better understood.

According to the survey, 50 per cent CROs see armed conflicts and/or use of weapons as having severe impact on their organisations in the next six months.

The WEF said its CRO outlook provides a mid-year pulse reading on the most pressing macro risks facing organizations and is based on a survey of its CRO community.

The survey asked CROs to gauge the likely level of global volatility in five broad areas -– geopolitical relations, the economy, domestic politics, society and technology, and to select up to five risks they expect to have a severe impact on their organizations for the remainder of 2023.