In a rapidly evolving world, businesses and governments alike are grappling with a complex array of risks. From geopolitical uncertainty to climate change and misinformation, the need for robust risk management strategies has never been more pressing.
In a recent discussion, Tony Van Niekerk of COVER engaged with Spiros Fatouros, CEO of Marsh McLennan Africa and South Africa, to reflect on the World Economic Forum (WEF) Global Risk Report and how these risks are unfolding in real-time.
A Dynamic risk landscape – Reflecting on the WEF report, Spiros noted that while the fundamental risks remain consistent—climate change, AI, extreme weather, and social polarisation—the pace at which they are occurring has accelerated.
“We’ve had a super dynamic start to the year,” Spiros observed. “When you consider geopolitical tensions, economic shifts, and ongoing climate change impacts, risks are not just theoretical—they are happening in real-time.”
One significant shift noted in the latest report is the prominence of state-based conflicts. While many risks have remained stable over the past two years, geopolitical instability has surged, bringing heightened concerns over business continuity and market stability.
The rise of misinformation and disinformation – Misinformation and disinformation continue to be major threats, especially in an era where artificial intelligence (AI) plays a growing role in content creation. Spiros highlighted how generative AI has amplified the ability to create and spread misleading information, raising concerns about its impact on politics and business decision-making.
“With the number of elections held over the past 12 months and into this year, misinformation is not just a theoretical risk—it has real-world implications,” Spiros stated. “As generative AI advances, the accessibility and cost of producing misinformation decrease, making it even harder to discern truth from falsehood.”
The challenge, according to Spiros, lies in how businesses and society as a whole adapt. While some expect that a natural equilibrium will eventually be found, the reality is that misinformation will remain a key risk in the near future.
Geopolitical risks and business interruption – Geopolitical uncertainty is another major factor influencing risk management strategies. Spiros emphasised that while underwriting has not fundamentally changed, there is a greater focus on understanding supply chain vulnerabilities.
“If you’re a large multinational organization, geopolitical risks will impact your supply chain, and that will impact your revenue,” he explained. “The underwriting community has improved in assessing these risks, but the real complexity comes in formulating claims—understanding the direct and indirect financial impacts of geopolitical disruptions.”
For smaller businesses operating within a single geography, the impact may be less severe. However, for companies with global operations, the current landscape demands a more nuanced approach to risk management.
Climate change: A Long-term business concern – Among the most pressing risks in the WEF report is climate change. According to Spiros, environmental risks dominate the long-term outlook, with extreme weather events and global temperature increases presenting significant challenges.
“If you look at a ten-year horizon, the top five risks in terms of frequency and severity are all environmental-related,” Spiros noted. “Africa, in particular, has been warming at a faster rate than the global average, which makes it imperative for businesses to plan accordingly.”
One of the key challenges businesses face is balancing immediate financial pressures with long-term climate considerations. Many African countries and businesses remain underinsured against environmental risks, exacerbating their vulnerability.
“We’re encouraging clients to not only conduct short-term risk assessments but to also overlay climate-related data to predict how their assets and operations may be impacted over the next 10 to 20 years,” Spiros explained. “For example, if a company has a major distribution center that could be at risk of flooding in the future, now is the time to incorporate that into long-term planning.”
The role of risk management in corporate strategy – As risks become more interconnected, businesses must adopt a holistic approach to risk management. Spiros highlighted the increasing relevance of risk advisory services at the board level, with organisations seeking expert guidance on how to integrate risk assessments into their long-term strategies.
“Marsh McLennan views climate and sustainability as one of the four major risk areas we focus on globally,” Spiros shared. “We work with clients across different industries to develop tailored risk management strategies that address both immediate and future threats.”
A key part of this effort involves bridging traditional risk management with emerging risks, such as AI-driven misinformation and evolving geopolitical tensions. Businesses that proactively address these challenges will be better positioned to navigate uncertainty and build resilience.
Looking ahead – The discussion between Tony Van Niekerk and Spiros Fatouros underscores the importance of staying ahead of risks in an increasingly volatile world. Whether it’s geopolitical instability, misinformation, business interruption, or climate change, companies must adopt a dynamic and forward-thinking approach to risk management.
As Spiros aptly put it, “The insurance industry excels at understanding and adapting to risk. It’s a continuous process of adjusting contractual frameworks, implementing new standards, and ensuring that businesses are equipped to handle emerging challenges.”
With expert guidance and strategic foresight, businesses can turn risk management from a reactive necessity into a proactive advantage, ensuring they remain resilient in an ever-changing global landscape.