In 2024 we highlighted the following risk trends: cyber security, artificial intelligence (AI), environmental, social, and corporate governance, market capacity, and shifting views towards managing risk. The complexity of these issues became more interrelated and integral to an organization’s operations.

As we step into 2025, the risk management landscape continues to evolve rapidly, shaped by advancements in technology, shifting workforce dynamics & challenges, environmental pressures, and increasing regulatory demands. Organizations that proactively address these challenges in cybersecurity, artificial intelligence (AI), employee retention, risk technology, and environmental impact will be better positioned to thrive. Let’s explore the key trends that will dominate risk management strategies this year.

The top trends discussed in this blog are:

  • Cyber Security
  • AI Operations
  • Employee Retention
  • Risk Technology
  • Environmental Impact

Cyber Security

If you remember our Risk Management Trends to Follow in 2024 blog, cyber security was one of the top risk trends and will remain on the list again this year. The Internal Audit Foundation of North America lists it as the top risk trend from last year, this year, and predicts it will remain the top risk trend in the following year (Internal Audit Foundation). 

The cyber security landscape remains a top priority as cyberattacks grow in scale and sophistication. With new vulnerabilities emerging from interconnected systems, businesses face heightened risks. Cyber resilience has become crucial. Public sector organization systems often house sensitive data, from financial records to public safety information, making them lucrative targets for cybercriminals. The continued risk in cyberattacks has underscored the need for robust cybersecurity measures (MNP).

Organizations are leveraging advanced tools to detect and mitigate threats in real-time, transforming reactive approaches into proactive strategies. To keep on top of potential risks, public sector risk professionals must follow suit and prioritize:

  • Regular cybersecurity audits and vulnerability assessments.
  • Investment in advanced threat detection tools.
  • Training staff to recognize phishing and other social engineering attacks.
  • Adopting data security solutions, software, and/or tools that are easy to use, scalable, and can integrate well with your existing systems. (Salesforce).

The Public Risk Management Association highlights the increasing frequency of ransomware attacks on public entities and emphasizes the importance of incident response planning (Public Risk Magazine).

Cloud-based solutions offer significant cybersecurity advantages, enabling organizations to safeguard their data and systems more effectively. According to Salesforce, these solutions provide robust security measures, including continuous monitoring, encryption, and automated updates to address emerging threats. Cloud providers often employ dedicated security teams and advanced tools to ensure compliance with industry standards, reducing the burden on internal IT resources. By centralizing security efforts and leveraging scalable infrastructure, cloud-based platforms enhance data protection, minimize risks, and support business continuity in an increasingly complex threat landscape (Salesforce).

 

AI Operations

Artificial intelligence is revolutionizing operational efficiency but also introducing unique risks. AI has the opportunity to transform public sector risk management operations, from streamlining administrative tasks to optimizing emergency response systems through predictive analytics and real-time monitoring. Machine learning algorithms can forecast risks, improve regulatory compliance, and prevent potential threats before they materialize. On the other hand, reliance on AI requires rigorous oversight to mitigate risks like bias in decision-making, data privacy concerns, and potential misuse (EY)(Forbes).

EY highlights these tips that professionals can use to help manage these AI risks (EY):

  • Ensuring transparency and accountability in AI systems.
  • Regularly auditing AI tools to identify and mitigate biases.
  • Collaborating with IT and legal teams to develop ethical AI policies.

Employee Retention

Employee retention should be at the forefront of organizational concerns. Workers today prioritize flexibility, inclusion, and opportunities for growth. To combat turnover, companies are emphasizing transparent communication, strong workplace culture, and career development programs. According to Forbes, investing in employee well-being and professional development is key to reducing turnover and building a resilient workforce, addressing burnout and creating meaningful engagement strategies are vital to keeping top talent (Forbes)(Public Risk Magazine).

Employee turnover continues to pose significant challenges for public sector organizations, particularly in critical sectors like public safety, health, and infrastructure. High turnover rates can lead to service disruptions, increased training costs, and diminished institutional knowledge.

To combat these challenges, Forbes suggests that public sector organizations (Forbes):

  • Foster a positive workplace culture with clear paths for career advancement.
  • Provide competitive salaries and benefits.
  • Emphasize flexibility, such as hybrid work models where applicable 
  • Implement tools that enhance efficiency through task automation 

Touching on the last point listed, when employees are given technology that supports and empowers them in their roles, it paves the way for a positive overall workplace experience - one that fosters greater organizational loyalty, engagement, and productivity (Deloitte).

 

Risk Technology

The integration of advanced risk technologies is no longer optional. Advances in risk management technology are empowering public sector organizations to better predict, assess, and respond to risks. From advanced data analytics to real-time monitoring systems, the integration of technology can significantly enhance resilience.

These technologies empower risk professionals to make informed decisions and adapt quickly to emerging risks. (Global Risk Community).

Risk technologies growing in popularity for public sector organizations are:

  • Cloud-based platforms for centralized risk management, like ClearRisk.
  • Geographic Information Systems (GIS) for mapping climate risks.
  • Predictive modeling tools to anticipate emerging threats.

 

Environmental Impact

The increasing frequency of extreme weather events, rising sea levels, and other climate-driven challenges have made environmental risks a top concern for public sector organizations. These risks not only threaten infrastructure but also disrupt communities and strain resources (Internal Audit Foundation).

To address climate risks, public sector risk professionals should:

  • Develop comprehensive climate adaptation and mitigation plans.
  • Strengthen infrastructure to withstand extreme weather.
  • Collaborate with stakeholders to promote sustainable practices.

The convergence of climate change and urban development requires innovative solutions and proactive planning to ensure long-term resilience. (Public Risk Magazine).

 

Conclusion

In 2025, successful risk management will hinge on adaptability and innovation. Embracing cybersecurity resilience, harnessing AI effectively, fostering employee engagement, leveraging advanced risk technologies, and preparing for climate-related risks are essential for navigating the challenges ahead. Public sector risk professionals that act decisively in these areas will not only mitigate risks but also unlock new opportunities for growth and transformation.

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