We are living in a “business unusual” world. Organizations have been faced with a landscape marked by continuous change and evolving challenges. The compounding disruptions that we’ve faced over the years have revealed vulnerabilities, and organizations have been continuously tested by new risks and crises.
The World Economic Forum’s Global Risks Report 2024 cites that the top risks are cybercrime, the adverse outcomes of artificial intelligence (AI), and extreme weather events. As we look ahead at 2024 and the years following, how can we navigate these challenges, find opportunities, and emerge more resilient?
Interrelated disruptions: Efficiency in complexity
The continuous rise of global uncertainties – from geopolitical tensions to extreme weather events – stands as a formidable challenge for organizations. As climate-related disruptions become more frequent and intense, organizations must be able to navigate through the complexities they bring. Finding efficiency amid this complexity requires strategic planning and a proactive approach.
To thrive in the face of compounding disruptions, risk, continuity, and resilience leaders must leverage technology to stress test their resilience strategies. This involves the simulation of various scenarios to identify vulnerabilities and enhance preparedness. Embracing data-driven operations becomes paramount, shifting from traditional document-based approaches to real-time, accurate data analysis. By doing so, organizations will not only respond effectively to immediate challenges but also gain a strategic edge in the long term.
Furthermore, there’s a transformative opportunity to integrate purpose-built AI solutions to alleviate repetitive, tedious activities and surface actionable, transformative insights so that teams can focus on high-impact, strategic decision-making. As the world evolves and becomes more complex, organizations can take advantage of available technologies to transform their risk, continuity, and resilience programs, ensuring they evolve alongside the ever-changing landscape. This adaptive mindset positions organizations to not just weather the storm but to emerge stronger, be more resilient, and be better prepared for the uncertainties that lie ahead.
“What is needed is a mindset that recognizes the full scale of the risk, while maintaining the optimism that we can and will respond in a way to avoid and mitigate the worst risks from occurring.”
— Gill Einhorn, Head, Innovation and Transformation, Centre for Nature and Climate, World Economic Forum
The rise of AI: A pragmatic approach
One undeniable trend shaping the business world is the rapid rise of artificial intelligence. The strategic integration of AI into business workflows will be a defining trend this year and the years following. As organizations grapple with the complexities of an ever-evolving landscape, leveraging AI in risk, continuity, and resilience programs emerges as a transformative opportunity. However, it comes with its share of concerns, such as the potential for misinformation or disinformation.
Those who intentionally embrace AI now will set themselves up for success early on by establishing a proactive strategy that will allow them to scale with the technology rather than playing catch-up in the future. By incorporating AI into risk, continuity, and resilience strategies, organizations not only save valuable time but also gain an ally in identifying gaps and fortifying defenses. The benefits of AI extend beyond productivity and efficiency; purpose-built AI contributes to the improvement of data quality and exponentially elevates analysis capabilities, enhancing the foundation upon which resilient strategies are built.
While the risks associated with AI are real, the proactive adoption of this technology unlocks unparalleled potential for growth. Embracing AI from trusted partners enables organizations to respond more efficiently to evolving challenges, allowing them to stay ahead of the curve. It’s an opportunity not just to keep pace with innovation but to confidently stay up to date with the latest capabilities and use AI as a tool to not only navigate risks but also thrive, not just survive, amidst uncertainty. Those who seize the opportunities presented by AI find themselves not merely passengers but rather drivers of resilience, steering their organizations toward a future of strategic advantage and adaptability.
When it comes to operational resilience, AI is so much more than just automating manual processes; AI technology can answer practitioners’ questions about their processes and plans with best practice recommendations that are specific to their own business. Generative AI can summarize incidents, generate crucial suggestions during a business impact analysis (BIA), identify gaps in recovery strategies, and more.
Managing risk across third parties
While AI is certainly a game changer for organizations, the state of third-party risk management (TPRM) and its scale necessitates the ability to respond more quickly to increased risks moving forward.
The number of vendors with which enterprises are engaging is increasing 15% YoY. During a recent Customer Exchange session (a virtual forum that is hosted weekly for Fusion users), Fusion’s Director of Third–Party Risk Management Wes Loeffler explained that “the traditional process of assessing vendors using spreadsheets or emails back and forth is not scalable. Managing third–party risk manually cannot be maintained effectively.” Organizations must understand how third-party risk is evolving to be adequately prepared and to implement strategies that empower them to address new and growing threats. Additionally, they must incorporate technology that enables them to manage the lifecycle of their vendors, assess risks, and utilize continuous monitoring solutions to be apprised of real-time issues with their vendors.
TPRM now goes beyond simply identifying inherent and residual risk among your third parties through yearly assessments. Risk levels are becoming more defined, allowing organizations to dive into greater detail to assess the growing scope of risk associated with their third parties. Beyond financial, reputational, operational, and compliance risk, consider the following risks on the rise:
- Cyber Risk – Entities must remain vigilant in discovering vulnerable parties that could result in their data and confidential information becoming exposed. This is even more prevalent as new AI technologies open the door for greater risk.
- Subcontractors – While you may have created redundancies with multiple vendors providing the same product or service, are those third parties relying on the same pool of providers? If there is an interruption with one of their providers, will that affect any or all of your vendors?
- Geographic Risk – Where are your vendors located? How will geopolitical disruptions, areas of turmoil, or natural disasters affect vendors within a certain geographic region?
- ESG – More and more, customers are seeking organizations with ethical and environmentally sustainable practices, values, and standards. If your third parties carry any environment, social, and governance (ESG) risks, you could also inherit them and, as a result, experience financial and reputational harm.
Moving forward into 2024, organizations can strengthen their third-party risk strategy through criticality tiering, continuous monitoring solutions, scenario testing, increased visibility into supply chains, establishing relationships with critical vendors, and prioritizing ESG considerations. Additionally, with regulations on the horizon – including a January 2025 deadline for the Digital Operational Resilience Act (DORA) – it’s more important than ever that entities develop a comprehensive understanding of the criticality of their third-party providers as well as have clear, scalable strategies to assess them.
Navigate through uncertainty with confidence
The evolving landscape offers great opportunities for innovation, automation, and growth. These are accompanied by an ever-increasing need for entities to fully understand their business, identify risks, and proactively address vulnerabilities, particularly when it comes to interrelated disruptions, AI, and third-party volume and complexity.
For more information on how Fusion can help strengthen your programs and strategies, contact our team or request a demo today.
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