Exploring the Business Risk Landscape for 2024

So far in 2024, the business risk landscape has been bleak

We’re not yet a quarter of the way through 2024. However, crises and critical events have been prolific.

Nor are the business threats expected to abate. Indeed, they’re only likely to intensify.

On the political front, for instance, elections in some of the most geopolitically significant areas are on the horizon, potentially heralding even starker increases in geopolitical risk.

For one, India, the world’s largest democracy, votes in the early spring.ⁱ

In June, the EU will hold elections for its Parliament.ⁱⁱ That Parliament gets the right to vote down the proposed Commission President of the world’s largest economic union.

Although not yet scheduled, U.K. elections may take place this year, as well.

Meanwhile, the world’s largest presidential election is slated for 2024, in Indonesia.ⁱⁱⁱ

Those are all likely to come before what some are considering the biggest event of them all – the U.S. presidential elections in November, almost assured to be a repeat of the bitterly contested 2020 campaign.

It’s no surprise then that geopolitical risk has already featured prominently among the top business threats in 2024.

But it’s not the only threat on our list. What are the others top business threats of 2024? We’ve culled them together to create the following Business Risk Landscape.

Supply chain snarls

A consequence of the Israel-Hamas War, Red Sea shipping lanes began the year deeply ensnarled, as attacks by Houthi rebels in Yemen^iv on commercial vessels effectively closed the critical shipping lane to trade.

Now, hundreds of vessels are being rerouted around southern Africa, according to analysis by J.P. Morgan, a detour of some 4000 miles.^v For context, the far longer trade route around the Horn of Africa adds an additional USD 1 million in fuel costs to the round-trip fare.vi

The 30% increase in transit times is having a predictable effect on shipping rates, as well. For instance, aggregate measures of container shipping costs are now two-and-a-half to three times of their December levels; and ocean spot rates have soared, too.^vii   

Asia-Europe shipping trade has been most impacted. In early January, for instance, Tesla and Volvo both announced that they were suspending production in Europe due to a shortage of components, a sign that attacks in the Red Sea were starting to bite.^viii

Similarly, more than half of U.K. exporters admitted being negatively affected by the Red Sea shipping disruption, according to a British Chambers of Commerce survey taken in late February.

Reprieve doesn’t seem in the offing, however. In fact, shipping giant Maersk predicts that vessel diversions will continue well into the second half of 2024.^ix

And with 30% of global container trade transiting through the impacted Suez Canal, disrupted trade will likely put upward pressure on consumer goods even if the Red Sea were the only unsettled shipping lane. Unfortunately, it hasn’t been.

Although cut through tropical jungle, the Panama Canal Zone has been hit by an historic drought. In fact, the Canal, through which 40% of all U.S. container traffic travels, has become so dry that ships are having to idle or sail entire continent(s) out of the way to get through more passable waterways.

Cost of living crisis

These persistent supply-chain disruptions will likely exacerbate the cost-of-living crisis, even though 2024 had previously been forecasted as the year that consumer prices fall.

Ahead of the 2023 holiday season, for instance, retail giant Walmart announced that prices on foods and other staples were falling.^x By mid-February, though, Walmart was singing another tune, announcing that prices had stabilized at much higher rates.^xi

Meanwhile, U.S. consumer prices in general rose more than expected in the first month of the year driven by surges in rental housing.^xii

The U.S. isn’t the only economy where persistently high prices have become the norm. J.P. Morgan economists forecast that the road to lower inflation will be bumpy in the U.K. and the Eurozone, as well.^xiii Even the Chinese economy, which many saw careening toward deflation, is seeing inflation trending up.^xiv

Of course, consumers aren’t the only ones suffering. For the first time, cost-of-living featured on the BCI Horizon Scan 2023’s list of top incidents, where it’s expected to stay until inflationary conditions ebb.

Cyber attacks on the rise

A perennial feature of that list is cybersecurity. And cyber-attacks are likely to feature in the business risk landscape this year.

In fact, they have already, as with high-profile cyber attacks on the Beirut International Airport^xiv, mortgage loan firm loanDepot^xvi, and UnitedHealth’s Change Healthcare.^xvii

Indeed, Change Healthcare’s systems have been down for a whole week, as of this writing, disrupting operations in pharmacies and health systems across the U.S.^xviii

Of course, the Change Healthcare attack isn’t the only high-profile cyber incident in the healthcare space. The electronic records system at one of the largest pediatric healthcare organizations in the Midwest, Lurie Children’s Hospital, remains down after a ransomware attack announced in early February.^xix

According to reporting, the Rhysida ransomware-as-a-service group which took responsibility for that attack now seeks to extort the children’s hospital for USD 3.4 million.^xx

Unfortunately, Lurie Children’s isn’t likely to be the sole victim this year, thanks to the rise of ransomware-as-a-service.

Third-party risk increasing

This year, the business risk landscape will likely be marked by hackers continuing to turn their attention to vulnerabilities in vendor’s systems to gain access to the data stored by organizations reliant on the vendor.

Already last year, a staggering 98% of organizations^xxi reported having a relationship with a vendor that experienced a breach within the last two years, attesting to the need for stricter third-party risk management protections.

To highlight the point that more needs to be done, the Basel Committee on Banking cited third-party risk management in its incomplete report card to banks for lagging in adopting Committee principles on operational resilience and operational risk.

Severe weather challenges

The year got underway with a magnitude 7.6 earthquake in Japan on New Year’s Day. The earthquake, which has left at least 168 dead, dozens missing, and over a thousand displaced, was an instant reminder of the persistence of severe weather events in the business risk landscape.^xxii

Nor have conditions improved. For a period in the middle of February, the entire population of California was under flood alert, as the state faced an unprecedented deluge.^xxii

It seems 2024 is racing to match last year, when the U.S. alone experienced a staggering 28 weather/climate disaster events with individual losses exceeding $1 billion.^xxiv

That figure was up eight from the year before. However, it was a staggering increase of 20 from the 1980-2022 yearly average, suggesting a deteriorating risk environment.

Business analysts, for their part, are predicting much of the same. In its Global Risk Report for the year, the World Economic Forum (WEF) is counting extreme weather events and critical change to Earth systems as the greatest concerns facing the world over the next decade.

Strategies to adapt to a murky business risk landscape

So, what can be done to mitigate the top business threats of the year?

For starters, organizations must increase centralizing risk scanning processes to enhance risk mitigation and enable a more proactive response to evolving threats. These measures should all fall under the banner of critical event management.

Indeed, effective critical event management (specifically) enables effective, interdepartmental communication mechanisms, giving business leaders a dynamic, consolidated view of threats, automated functionality to assess and respond to those threats, as well as information capture capabilities for critical event reporting.

Critical event management technology in 2024

But how to implement critical event management strategies expeditiously as the business risk landscape deteriorates? We recommend critical event management software. These are solutions and related services designed to manage an institution’s preparation, response, and recovery from events that impact continuity, operations, and safety.

But not just the high-impact events we cited above. Critical event management solutions can also help organizations handle the lower-impact events and critical issues they’ll face in 2024.

That gives the organizations that procure these solutions an advantage; namely, they can use the same tools to manage routine, smaller issues as they do for larger impact events.

Of course, basic benefits will come from digitizing critical event management strategies in 2024 (including communications, incident response, and case management) in the first place.

So, what do the core components of critical event management solutions look like? Here are critical event management software capabilities to adapt to the business risk landscape:

Core capabilities of critical event management software

Crisis management

Advanced solutions apply best practices to plan for, respond to, and manage critical events and exercises. Built on international standards, such as ISO 22398, the solutions enable faster response, better collaboration using plans and playbooks, smart workflows, and real-time dashboards and insights, ensuring better incident response, decision-making, and continuous improvement.

Incident response plans and checklists

Best-practice libraries come included do organizations can easily create crisis strategies and action plans for different types of events that define the required strategy, action items, completion time targets, and people involved.

Critical infrastructure protection

Innovative solutions keep up with the escalating risk to key assets, assessing those risks in advance and monitoring critical facilities throughout the emergency response process.

Welfare checks

The solutions enable organizations to send welfare check messages to their event response staff or any other type of contact. Organizations can easily collect their replies to identify who needs assistance and prioritize follow-up actions.

Crisis communications

These single systems help organizations manage complex communications, centralizing, approving, and standardizing their crisis response. these solutions provide effective communication pathways for all aspects of incident management.

Emergency management

These tools provided all that is needed to manage any incident effectively through the entire lifecycle of mitigation, preparedness, response, and recovery, following ISO, ICS, and other national standards. They keep your whole team following the same plans, communicating on the same platform, and viewing the same operating picture - from any place or device.

Incident and resource mapping

Comes equipped with powerful mapping tools to create multilayers maps, integrating both external feeds and any information housed within the platform.

Operational cycle management

These systems support the battle rhythm of your response operations, understanding and tracking reporting periods.

Community lifeline monitoring

These systems provide executive-level insight into safety threats to the public and to staff, by regularly assessing community lifelines.

2024 has already shaped up to be the year business risk becomes business reality, with critical incidents only likely to increase and intensify as the year progresses.

What can be done? Organizations should make this the year that they adapt to the business risk landscape with integrated resilience and critical event management software that facilitates a comprehensive and holistic approach to resilience, crucial collaboration and coordination, and critical insights about the many threats to come.

Sources

i Business Today Desk, Business Today: The year of elections: 4 billion people will cast a vote in over 60 countries in 2024. Available at https://www.businesstoday.in/latest/world/story/the-year-of-elections-4-billion-people-will-cast-a-vote-in-over-60-countries-in-2024-412123-2024-01-06.

ii Le Monde: European Parliament elections set for June 6 to 9, 2024. Available at https://www.lemonde.fr/en/europe/article/2023/05/17/eu-parliament-elections-set-for-june-6-to-9-2024_6026980_143.html.

iii Ananda Teresia and Bernadette Christina, Reuters: Indonesia presidential frontrunner under fire as rivals attack defence plans. Available at https://www.reuters.com/world/asia-pacific/indonesia-presidential-frontrunner-under-fire-rivals-attack-defence-plans-2024-01-08/.

iv Michael Race, BBC: What do Red Sea assaults mean for global trade? Available at https://www.bbc.com/news/business-67759593.

v J.P. Morgan: What are the impacts of the Red Sea shipping crisis? Available at https://www.jpmorgan.com/insights/global-research/supply-chain/red-sea-shipping#:~:text=Audio%20Descriptive%20On-,What%20are%20the%20impacts%20of%20the%20Red%20Sea%20shipping%20crisis,to%20surge%20nearly%20five%2Dfold.

vi Noah Berman, Council on Foreign Relations: How Houthi Attacks in the Red Sea Threaten Global Shipping. Available at https://www.cfr.org/in-brief/how-houthi-attacks-red-sea-threaten-global-shipping.

vi J.P. Morgan: What are the impacts of the Red Sea shipping crisis? Available at https://www.jpmorgan.com/insights/global-research/supply-chain/red-sea-shipping#:~:text=Audio%20Descriptive%20On-,What%20are%20the%20impacts%20of%20the%20Red%20Sea%20shipping%20crisis,to%20surge%20nearly%20five%2Dfold.

viii Victoria Waldersee et al., Reuters: Tesla, Volvo Car pause output as Red Sea shipping crisis deepens. Available https://www.reuters.com/business/autos-transportation/tesla-berlin-suspend-most-production-two-weeks-over-red-sea-supply-gap-2024-01-11/.

ix Lori Ann LaRocco, CNBC: Shipping giant Maersk says Red Sea vessel diversions could extend into second half of 2024. Available at https://www.cnbc.com/2024/02/14/shipping-giant-maersk-doesnt-expect-red-sea-transits-anytime-soon.html.

x Amelia Lucas and Melissa Repko, CNBC: Consumers are tired of inflation. But some retailers fear falling prices. Available at https://www.cnbc.com/2024/02/25/inflation-vs-deflation-retailers-fear-falling-prices.html.

xi Ibid.

xii Lucia Mutikani, Reuters: Rising rents push US inflation higher; rate cuts still expected in 2024. Available at https://www.reuters.com/markets/us/us-consumer-prices-rise-more-than-expected-january-2024-02-13/.

xiii J.P. Morgan: Global inflation forecast: Will prices come down in 2024? Available at https://www.jpmorgan.com/insights/global-research/economy/global-inflation-forecast.

xiv Ibid.

xv  Pierluigi Paganini, Security Affairs: A Cyber Attack Hit the Beirut International Airport. Available at https://securityaffairs.com/157079/hacking/cyber-attack-hit-beirut-international-airport.html.

xvi StreetInsider: loanDepot (LDI) Experienced a Cybersecurity Incident. Available at https://www.streetinsider.com/Corporate+News/loanDepot+%28LDI%29+Experienced+a+Cybersecurity+Incident/22604157.html.

xvii Ashley Capoot, CNBC: Outages from cyberattack at UnitedHealth’s Change Healthcare extend to seventh day as pharmacies deploy workarounds. Available at https://www.cnbc.com/2024/02/27/unitedhealths-change-healthcare-cyberattack-outages-continue-pharmacies-deploy-workarounds.html.

xviii Ibid.

xix Alexander Martin, The Record: Ransomware gang seeks $3.4 million after attacking children’s hospital. Available at https://therecord.media/lurie-childrens-hospital-chicago-ransomware-rhysida.

xx Ibid.

xxi Professo Stuard E. Madnick, Ph.D., Apple News: The Continued Threat to Personal Data: Key Factors Behind the 2023 Increase. Available at https://www.apple.com/newsroom/pdfs/The-Continued-Threat-to-Personal-Data-Key-Factors-Behind-the-2023-Increase.pdf.

xxii  Hiro Komae et al, AP News: Thousands forced from homes by a deadly Japan earthquake on New Year’s face stress and exhaustion. Available at https://apnews.com/article/japan-earthquake-ishikawa-disaster-evacuation-rescue-snow-c09c02361314860712ca5a5e9f52d3a5.

xxiii Steve Almasy and Mary Gilbert, CNN: Nearly the entire population of California is under flood alerts as rain drenches the state. Available at https://www.cnn.com/2024/02/19/weather/california-storm-rain-flooding-monday/index.html.

xxiv National Centers for Environmental Information: Billion-Dollar Weather and Climate Disasters. Available at https://www.ncei.noaa.gov/access/billions/.