Risk and Crisis 2025: Navigating an Increasingly Complex Landscape

27 March 2025 Reading Time: 4 minutes

By: Deborah Hileman, SCMP, GCSCE, CCMC:

Now we are well into the 21st century, and organizations face an increasingly complex and interconnected risk landscape that demands a strategic and proactive approach to risk management and crisis preparedness. From cybersecurity threats and AI-related challenges to supply chain vulnerabilities and ESG concerns, businesses must navigate a wide array of risks that may significantly impact their operations, reputation, and bottom line. This article explores the key risk factors shaping the 2025 business environment and outlines strategies for effective risk management and crisis communication in this quickly evolving landscape.

Cybersecurity and AI Risks

Cybersecurity remains a dominant concern for organizations of all kinds, with cyber incidents ranking as the most important global business risk in many studies. The proliferation of deepfake videos, estimated to reach 8 million circulating this year, creates new avenues for social engineering attacks and disinformation campaigns that could devastate ill-prepared organizations.

Artificial Intelligence is playing a bigger role in both cyber-attacks and cyber defense. While AI-powered security tools enhance threat detection and free up analysts’ time for complex work, cybercriminals are leveraging AI to create more sophisticated attacks. The rise of AI-powered scams is particularly concerning, with a sharp increase in financial losses expected this year.

The challenge of “shadow generative AI” – unauthorized use of AI tools by employees –is emerging as a growing risk for data leakage and misinformation within organizations. This underscores the need for comprehensive AI governance and usage policies.

Supply Chain and Third-Party Risks

Supply chain attacks continue to pose a significant threat. Gartner predicts that by this year, 45% of global organizations will be affected by a supply chain attack. This trend underscores the need for businesses to both secure their own systems and carefully vet the security practices of their suppliers and partners.

Third-party risk management is becoming increasingly complex, with a plurality of large organizations citing it as a major challenge. The interconnectedness of modern business ecosystems creates a complex web of risks that organizations must navigate carefully.

ESG and Climate Risks

Environmental, Social, and Governance (ESG) risks are becoming more important for businesses as environmentalists and investor activists ramp up various campaigns. Leading-edge companies are integrating these factors into their risk management strategies to address stakeholder concerns and meet regulatory requirements.

Climate change-related risks, in particular, are gaining more prominence. Organizations need to assess the potential impact of climate-related events on their operations, supply chains, and long-term sustainability.

Geopolitical and Economic Risks

Geopolitical tensions and economic uncertainties are creating additional risks for global businesses. Trade disputes, political instability, state-sponsored conflict, and regulatory changes in key markets have the potential to significantly impact operations.

Economic risks, including potential market downturns, inflation, and currency fluctuations, require careful monitoring and mitigation strategies. The evolving US-China relationship remains a focal point for many companies, influencing investment decisions and supply chain strategies.

Regulatory Compliance Challenges

The proliferation of regulatory requirements worldwide is adding a growing compliance burden for organizations. Companies need to stay informed about evolving regulations across different jurisdictions and implement agile compliance processes to avoid penalties and reputational damage.

Challenges for Management

This year’s complex risk landscape has several key management challenges:

• Complex Supply Chains: Increasingly integrated and complex supply chains are leading to a less transparent and unpredictable risk landscape.
• Skills Gap: Widening cybersecurity and risk management skills gaps are making it extremely challenging to manage risks effectively.
• Third-Party Risk: Managing risks associated with an extensive network of partners and suppliers is becoming increasingly difficult.
• Integrating Technology: Effectively leveraging advanced risk management technologies, while managing the risks these technologies introduce will challenge IT teams and risk managers alike.

Crisis Management and Communications Needs

In this high-risk environment, effective crisis response also becomes crucial. Businesses should consider:

• Predictive Planning: Using data-driven insights to identify potential risks and ensuring critical information is accessible 24/7, enabling informed decisions during crises.
• Regular Testing and Training: Conducting tabletop exercises and regular plan reviews to identify gaps and improve readiness.
• Technology Investment: Leveraging tools like issues-and-crisis management platforms and scenario-specific response and communication plans to improve transparency and responsiveness.
• People-Centric Approach: Focusing on employee well-being and transparent communication to all stakeholder groups to build a more resilient organizational culture.
• Rapid Response Capability: Developing the ability to respond quickly and effectively to minimize damage and maintain stakeholder trust.

Effective Risk Management Strategies

To address these diverse risks, organizations are adopting more sophisticated risk management approaches:

• Holistic Approach: Implementing a comprehensive risk management strategy that considers the interplay between different risk categories.
• Advanced Technologies: Leveraging AI and advanced analytics for better risk prediction and mitigation.
• Culture of Risk Awareness: Fostering a risk-aware, crisis-ready culture throughout the organization to improve overall resilience.
• Continuous Monitoring: Implementing real-time risk monitoring systems to enable rapid response to emerging threats.
• Scenario Planning: Developing and regularly updating various risk scenarios to improve preparedness.
• Stakeholder Engagement: Actively engaging with stakeholders to understand their concerns and expectations regarding risk management.

Measuring Effectiveness

To ensure the success of risk management and crisis communication strategies, organizations should establish clear metrics and regularly assess their effectiveness. Key performance indicators might include:

• Time to detect and respond to incidents
• Financial impact of risk events
• Stakeholder trust and reputation scores
• Regulatory compliance rates
• Employee risk awareness levels

As we navigate this environment, it’s clear that a proactive, holistic approach to risk management and crisis preparedness is essential. Organizations must stay informed about emerging threats, invest in advanced technologies, and foster a culture of risk awareness to effectively mitigate risks in this ever-evolving landscape.

Those that adopt a proactive, comprehensive approach to risk management and crisis preparedness will be better positioned to navigate the complex and interconnected risk landscape of the future, turning potential threats into opportunities for growth and resilience.

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Deb Hileman is President and CEO of the Institute for Crisis Management

 

Written by: Editor