New and Emerging Risk

At Orestone we continually scan the horizon for ever-changing, new and emerging risks and trends. In one annual report for a major multinational company, I wrote that the world today faced a spectrum of new and diverse threats to which governments, multilateral organisations and multinational corporations would have to respond. The mitigation of the risk, uncertainty and instability that will follow will require the development of innovative and forward-thinking solutions. The risks included a renewed focus on the threat posed by terrorist groups to western countries, the rise of the non-state actor and the role of the failed states that harbour them. This has required a strategic review of the stability of borders and the integrity of nation states amid continuous armed conflict and further incidents of international terrorism.

Besides the threat posed by terrorist groups, the attention of the world remains fixed on a number of other areas where borders are disputed, or where there is international tension or even armed conflict. North Korea remains a fragile and dangerous state, and its adventurism poses a threat to its regional neighbours and further afield, as well as to international commerce and industry. China continues to flex its muscles in the South China Sea, despite international rulings made against it, leading to the possibility of regional instability and threatening Asia-Pacific relations.

There is broad recognition now that, whatever its cause, climate change is impacting the natural environment, and that nations and peoples will be severely impacted. Already, small island states are threatened by rising sea levels, but in larger, more populous countries, whole populations may suffer the impacts of global warning. Crop cycles are changing, forcing the local people who sow and harvest them to move, and possibly fall into poverty. Companies whose supply chains rely on critical crop yields are forced to develop other sources elsewhere, disrupting distribution, business and markets. Food security in fragile economies will be impacted by these agricultural changes, leading to conflict over water and other resources. This is not a future threat: it is occurring today. Companies and governments will be reuired to respond with measures designed to ensure resilence and sustainability. Governments will be challenged to secure their food resources and multinational corporations their supply chains by way of innovative strategic solutions. 

Faced with armed violence or hunger, people are increasingly forced to flee their homelands, becoming migrants in other countries. War in the Middle East has resulted in massive waves of irregular migration, unprecedented in modern times, as hundreds of thousands of people seek sanctuary from conflict, violence and economic hardship. The receiving countries will require far-reaching measures to secure their borders and manage the large numbers of migrants. This will necessitate a renewed focus on the security of the aviation and the maritime industries as air and sea ports, airlines and shipping face the impacts of the mass migration.

The risk of pandemic disease, witnessed so virulently in the 2014 Ebola outbreak in western Africa, and today with COVID-19, is exacerbated in countries that are impacted by poverty. High rates of uncontrolled mass migration will bring a heightened risk of the spread of disease, demanding a renewed focus on border controls and health. Economic migrants are also increasingly moving to cities in a growing economic phenomenon seen around the world. Governments and multinational corporations are pressured to respond to the challenges posed by these social trends and industry will require novel approaches to risk mitigation.

The global economy is subject to ever increasing interdependence between nations, and economic instability can have far reaching effects. Slowing growth in China and the decline in the oil price are among the factors that are putting pressure on markets worldwide. Uncertainty over the future of Britain in Europe as well as other geopolitical concerns mean that policy makers have few firm foundations on which to base their positions. As a trusted partner to its clients, Orestone works to support decision makers to face these and other risks with innovative strategic options and advisory services.  

Ian Betts