Goodbye to another year of disruption. This has not been a year of a return to normal, new or old, but instead has been the advent of a transitional world, nuanced and fragmented. In 2022, businesses will face this new world alone.
Geopolitical risk is back, but it never really went away. The US, China and the EU are redefining not just what they stand for, but where and how they stand for it. The rest of the world will have to keep up. For businesses, geopolitics will shape the opportunities and risks at play on every front. Understand, monitor and manage geopolitical risk more carefully than you have for decades.
The top security risk for business in the year ahead comes from the global rise of dysfunctional, vulnerable and fragile states and, thanks to the pandemic, their diminished capacity to absorb and manage external shocks and internal challenges. The pandemic both caused and exposed political and institutional fragility. We saw this as much in the prosperous global North as in the South. With governance and geopolitical tensions putting the world’s economy at risk, businesses will be left largely on their own.
Failure to prepare adequately for cyber threats in 2022 will have potentially terminal consequences. The nation-state – one of the most important lines of defence against cyber-threat actors – is failing to deter aggressive behaviour, as hostile cyber-capabilities proliferate. Around the world, states and cyber-criminals are working together, and more than they have in the past. This disruptive power falls on an even wider attack surface of a rapidly digitalising world. Private sector, fend for yourself.
The Taliban’s takeover of Afghanistan and the COVID-19 pandemic will shape terrorism in the year to come and beyond. These two developments pose different kinds of threats, but both make for an increasingly diverse threat landscape. The pandemic aggravated the grievances and divisions which drive violent extremism and weaken government counter-terrorism capabilities. Afghanistan risks becoming a safe haven for internationally minded terrorist groups. It is unclear if the Taliban can or will control them.
Natural hazards caused by climate change are the main operational risk for 2022. Too many organisations respond event by event. Climate-driven operational risk must now be at the heart of any effective, long-term risk mitigation strategy. In many cases, your business’ survival will depend on it: 2022 is the time to adapt, gain competitive advantage, survive and even try to thrive.
This year the risks of a misstep around environmental, social and governance (ESG) issues will grow as pressure to score big on sustainability metrics run into stronger regulation and activism. Being caught out by activists is one thing, being hit by the Securities and Exchange Commission is quite another. Don’t focus on the E at the expense of S and G: this is where the biggest risk lurks. For global investors and companies making their net-zero pledges, overlooking the full scope of ESG issues will risk turn offsetting into something more like offloading.
See the Control Risks RiskMap 2022 here.