The future of technology emerged as the top risk of concern of today and tomorrow for organisations in the Asia-Pacific region, according to a recent survey by advisory, broking, and solutions company WTW.
This finding came even considering the role of artificial intelligence (AI) and technology in driving change in the next 10 years.
As if technological advancements per se have not been an area of concern for the Finance function, with the way it brings in shifts within the department and its people, finance leaders are indeed in need to fully consider the risks that come along with digitalisation.
When it comes to actionable insights, 35% of APAC respondents said they have never been asked to feed into their organisation’s emerging risks evaluation. More than half (55%) were unable to specify the emerging risks that most concern their organisation, despite the majority being able to identify the top five changes they expect to see over the next two (93%) and 10 years (88%).
WTW says this suggests there is opportunity to enhance internal intelligence processes through structured approaches. Action is needed to connect institutional pockets of risk intelligence and ensure a coordinated approach across the organisation. Scenarios were seen as valuable ways (35%) for organisations to tell that story and determine the appropriate strategy.
"The ability to effectively manage risk is key to thriving in an uncertain world. With regulators deepening their own exploration into emerging risks, investors asking more questions and organisations facing material financial consequences as risks evolve, there is a need for new approaches," says Simon Weaver, head of APAC and corporate risk & broking, APAC at WTW.
"We need more than data-informed decision making to explore the emerging risks shaping risk and opportunity. We need to focus on optimising risk outcomes. Smart specialisation, smart service, smart use of data and smart research. It all comes together to help navigate the complex risk landscape," Weaver adds.
Apart from technology, geopolitical uncertainties have also accelerated changes in global supply chains, leading to supply chain (23%) being the second most mentioned source of emerging risk in the region over the next two years by businesses, featuring either side of cyber risk (34%) and regulatory changes, workforce planning and effectiveness (20%).
This is alongside the continued amplification and acceleration of the environmental risk category, which dominated the longer-term view.
Over the next decade, 53% of respondents in APAC said they expected climate change and climate transition risks to be a key source of change with wider mentions of effects on investments, impact of travel demand, crop production and regulation featuring alongside concerns of physical risk events. Organisations expect to see more frequent catastrophic events and are uncertain about what that future might look like.
