Global risk managers must brace for disruption

In the midst of geopolitical turbulence, multiple ongoing conflicts, a historic election year, and rapid technological advancements such as AI, risk management and decision making must adapt to meet this new era of uncertainty.

This was the key message from a panel at the FERMA Forum 2024, titled “Global Transformations Shaping Europe’s Future as the Decade Progresses.” The panel featured Johannes Breitholtz of the Swedish Armed Forces, Yuriy Fedoriv of KPMG Ukraine, Mark Lewis of Andurand Capital Management, Barbara Teixeira Araujo of Moody’s in the Czech Republic, and Michele Wucker of Gray Rhino & Company (US).

The panel emphasised the tumultuous state of global political dynamics, describing it as akin to juggling multiple autonomous events. They pointed to the instability within some European governments, where difficulties in forming stable administrations and securing budgets hinder meaningful policymaking. This is especially concerning for environmental issues, as political disarray obstructs the development of strategies needed to address climate change and its broader impacts effectively.

The urgency of climate action was a key theme for the panel, pointing out the paradox of Europe’s aspirations for a future dependent on renewable energy sources while acknowledging the continent’s heavy reliance on fossil fuels, particularly in regions like Germany. This divergence creates significant political tension, as seen by the backlash against ambitious climate policies and the rise of far-right sentiments in Europe. These sentiments often oppose aggressive climate action and can jeopardise the consensus needed for effective long-term solutions. 

The European Union’s goal of transitioning to electric vehicles by 2035 was also addressed. Resistance, especially from nations with strong automotive industries, reflects concerns about economic risks posed by abrupt legislative changes, the panel observed. Rising populism and anti-environmental rhetoric across EU member states further challenge the feasibility of progressive climate policies.

The panel also highlighted the intersection of climate change and security, noting that the long-term impacts of climate change exacerbate existing conflicts and catalyse new ones. With resources such as water becoming scarcer, competition for these commodities creates fertile ground for disputes, both domestically and internationally. The implications extend to geopolitical dynamics, particularly as nations like China and Russia exploit emerging opportunities related to resource access in vulnerable regions.

Real-world climate impacts, like the catastrophic wildfires in recent summers and their economic fallout—such as the spike in cocoa prices—illustrate the growing disruptions to agriculture and food security. This points to a potential crisis, with rising food prices impacting populations globally.

Finally, the panel stressed  the critical need for preparedness amongst risk management professionals, suggesting that the exacerbation of issues such as flooding and wildfires will necessitate a re-evaluation of strategies to mitigate the impacts. 

FERMA Forum Today is in partnership with Captive Review, part of Newton Media.

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