Trade restrictions, geopolitical uncertainty, and AI governance gaps are identified as the biggest risks to growth for global companies, according to a new KPMG report.
The findings in KPMG’s Top risks forecast: Bottom lines for business in 2024 and beyond shine a light on the multifaceted, complex challenges facing companies looking to grow internationally at a time of increasing divergence on regulation, conflict, technological advancement and political uncertainty.
The report’s analysis identifies the three most critical business risks likely to impact operations in the second half of 2024 and beyond:
Trade policy restrictions: global trade restrictions have been on the rise, with approximately 3,000 restrictions imposed, nearly tripling since 2019. This trend of protectionist trade policies poses challenges for organizations operating in international markets. Such restrictions can create barriers and hinder economic growth, affecting supply chains and market access. Organizations should be prepared to navigate these trade policy restrictions and explore alternative strategies to mitigate potential disruptions.
Geopolitical vulnerability requires operational resilience: the geopolitical landscape is characterized by increasing vulnerability, driven by various factors such as rapid technological advancements, climate change, and geopolitical tensions. In 2023, a staggering 91 countries were involved in some form of conflict, a significant increase from 58 in 2008. This escalation of conflict has a profound impact on the global economy, with conflict estimated to have a 12.9 percent impact on global GDP. To mitigate the risks associated with vulnerability, organizations must prioritize operational resilience. KPMG says that this involves implementing proactive risk management practices, conducting scenario planning, diversifying supply chains, and strengthening cybersecurity measures.
AI governance gaps: artificial Intelligence (AI) has become a transformative force across industries, with investment in AI increasing more than fivefold between 2013 and 2023. While AI presents immense opportunities, it also brings about governance gaps that organizations must address. Ethical and responsible AI deployment is crucial to maintain trust among stakeholders. Organizations should prioritize transparency, accountability, and fairness in their AI systems to mitigate potential risks and ensure its responsible integration into their operations.
