Risk assessment: What companies fear most

Despite the massive impact of the Corona crisis on global supply chains and the immense investment in crisis management, cyber risks continue to be perceived as the biggest threat by the global economy. This result is provided by the analysis and objective evaluation of various global risk studies and surveys conducted annually by the Funk RiskLab in Zurich. For the Funk Global Risk Consensus, the RiskLab evaluates leading studies and risk reports on global corporate risks and consolidates their results in a ranking, the Global Risk Consensus. The ranking of the top five global risks for companies is as follows:

1. cyber risks

As in previous years, companies feel most threatened by cyber risks in the Corona crisis. The professionalism of attackers (targeted division of labor among attackers as well as more efficient and effective attack processes) is developing dynamically and poses growing challenges for all companies. The Corona crisis exacerbated this development, as millions of office jobs had to be moved to home offices virtually overnight and largely unprepared in the spring of 2021. This made it easier for cyber criminals to gain access to corporate networks. The extent of potential damage cannot yet be estimated.

2. non-occupational diseases (pandemic)

For the first time since the regular publication of the Funk Global Risk Consensus, so-called "non-occupational diseases" made it into the top 5 corporate risks practically out of nowhere. A pandemic was not included as a major risk by any of the underlying studies in previous years. The pandemic risk disappeared from corporate risk assessments relatively quickly after an internationally significant event (e.g., swine flu, bird flu, SARS, Ebola) because the probability of occurrence was considered very low. This shows that risk specialists and management also quickly forget and direct their focus on obvious risks, thereby neglecting latent risks. It is obvious that the risk of a pandemic, with its enormous impact and underestimated probability, has become significantly more relevant as a result of the corona crisis. It remains to be seen how long the pandemic risk will remain in the consciousness of corporate managements.

3. changing regulations

Equally weighted as in the two previous years, but downgraded by one rank, was the risk of rapid changes with regard to national and international regulations. In times of major change (digitization, climate change, energy transition, shifts in global political power), this risk remains on the risk managers' monitor.

4. unfavorable market developments

Unfavorable market developments continue to rank among the top 5 risks for companies in the assessment of risk specialists and management. In view of the current global uncertainties and the far-reaching consequences associated with the risks ranked first to third, as well as the associated economic imponderables, this assessment is very understandable.

5. extreme weather events

Global climate change is also leaving its mark on risk assessment. The trend toward more and larger floods, long periods of drought, and major storm fronts is manifesting itself abundantly in the risk reports of leading organizations. Climate change is not only affecting entire industrial or tourist regions, but also the global supply chains of companies. The economic impact of extreme weather events in 2020 was particularly significant in the Asia Pacific and North America regions.

Shortage of skilled workers not part of risk assessment at present

In a direct comparison with the previous year, it can be seen that the "shortage of skilled workers" risk has moved out of the top 10 risks faced by companies from its position as number 4 in 2020. This may be a short-term, Corona-related phenomenon, according to Funk's assessment.

Source and further information: Radio group