In 2022, global industries were forced to adapt and respond to a growing list of emerging risks and disasters. This past year, strides have been made to amplify the adoption of new technology, expand the talent pool and adopt innovative, data-driven, risk management strategies. For 2023, the risk landscape is expected to change faster than most organizations can manage - leaving executives and risk managers struggling with the question: “How can I make my organization more resilient?”
Awareness of risk management trends is critical for organizations to be prepared for anything that comes their way. This article compiles information from a combination of resources, highlighting five increasingly relevant trends that executives and risk professionals should follow in 2023 to prepare for; emerging risks, anticipate unplanned costs, and make strategic decisions.
Trends discussed in this blog are:
- Cyber Security
- Labor Shortage & Employee Turnover
- Supply Chain Management
- Shifting Risk Profiles
Cyber security is one of the most popular risk conversations and risk management leaders are noticing. Hybrid work and digital business processes in the cloud have introduced new risks increasing the aggressive threat environment. Ransomware attacks on the digital supply chain, and deeply embedded vulnerabilities, have exposed technology gaps and skills shortages (Gartner).
Ways to be resilient through this change in environment (FinTech):
- Rethink the security technology stack to address new threats.
- Push cybersecurity decision making out to all aspects of business.
- Evolve and reframe the security practice to better manage cyber risk.
Labor Shortage & Employee Turnover
Accelerated retirement for “baby boomers” and shifting expectations around work due to the repercussions of COVID-19 creates a strenuous labour shortage that is impacting virtually every industry., employee turnover is posing serious risk to businesses.
Among industries, the number of active job seekers is highest (25% to 36%) in telecommunications, technology, oil & gas, and financial services, and lower in education, healthcare, real estate and government (14% to 15%). This means that employees are more likely to “jump ship”. Something that is often overlooked is the “pull” on your employees from other organizations. In order to gauge this information, take a look at your internal recruiting data and metrics and track the hiring patterns of your competitors (Gartner).
2023 is the year of investing in employee retention, consider implementing the following:
- Increased salaries to combat rising inflation
- Increased training and clear growth paths
- Hybrid work environments
- Additional employee benefits
Organizational growth transitioned from 6-7% at the end of 2021, to 3.7% at the end of 2022, and followed by the forecasted 2.2% for 2023. Factors that weigh in (Forbes):
- Inflation, recession
- Demand downturn
- Supply shortages
- Weather disruption
Insurance is not the only option when managing supply chain risk. When analyzing risk control alternatives, business leaders should consider online-cloud based technologies that link between supply chain partners, and leverage data insights to analyze potential vulnerabilities.
“What people don’t realize is that most supply chains are configured manually. That means there’s a human adjusting the parameters every time an interruption occurs. But that’s a tedious task that people are simply too inefficient to do successfully on a large scale,” - Bob Rogers, CEO of Oii.ai, a data science company specializing in supply chain modeling (Forbes).
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Shifting Risk Profiles
In response to economic disruption, corporate risk managers are shifting risk profiles in an attempt to reduce costs. This means that organizations are being left underinsured (or uninsured in some cases) , taking on more risk in house. Insurance carriers may become more selective in response to these changes, highlighting the importance for companies to communicate any business changes (Liberty Mutual). Better visibility for your insurance provider and broker can help ensure the right coverage and eliminate any overpaying for your organizational risks.
Property valuations are another factor impacting risk profiles. Liberty Mutual’s experts estimate that 75 percent of commercial businesses are undervalued. Factors to be considered in proper evaluation include construction costs, the frequency and severity of weather activity and business interruption.
The global risk landscape is evolving rapidly in 2023. Awareness of trends is the first step to understanding what your organization needs to be prepared for. While it’s impossible to predict how long these trends will stay around, we can assume at the very least that they will have a lasting impact on the way organizations are operating. Whether it’s cyber attacks, employee instability, supply chain disruptions or shifting risk, businesses need to focus on operational resilience to defend themselves against the risks.
An important trend is the adoption of more robust and data driven risk management tools to provide visibility into risks and exposures. Data is key in 2023 when dealing with insurers, investors, board members, and other stakeholders in your business. These risks are escalating and impacting businesses everyday, and those with information will be the most prepared to face these challenges. It is not only critical to act fast, but to continually monitor and adapt your continuity plans to reflect the most urgent threats to your business.
To learn more about how our solutions can help manage your risks in 2023…schedule a free product demo here!