BDO, a leading global professional services firm, has published its 2024 Global Risk Landscape report, titled “Antifragility: Risk as a Driver for Success.” This year’s report delves into the pressing issues organisations face in an era defined by constant crisis and highlights the critical importance of adopting an antifragile mindset to not only survive but thrive in this turbulent environment.
Disruption is now occurring at an unprecedented pace, with 84% of survey respondents indicating that the global risk landscape is more defined by crisis than at any point in recent memory. This relentless cycle of disruption is exerting enormous pressure on organisations, as 60% of business leaders report that the velocity of risk is increasing, making it challenging for businesses to keep up.
“The more change that takes place, the more risk that organisations face. And change is now happening at a faster and more frequent tempo than ever,” notes Richard Walker, National Head of Risk Advisory Services, BDO South Africa, in a foreword to the report.
The report indicates that there’s also been a shift in the type of risk business leaders feel unprepared for. Regulatory risk has surged to the top of that list, climbing a significant 13 places compared to last year’s report — marking the most significant rise in a single risk in the past three years (coming in at 37% compared to 7% last year.)
This shift may be attributed to rapid technological developments, and/or the spate of elections happening in major economies this year. Supply chain risk, influenced by geopolitical tensions such as Russia’s ongoing war on Ukraine and the conflict in the Middle East, has also risen to second place.
Cyber risk, which was the second-biggest risk in 2023, has dropped to fifth, while environmental risk has tumbled to ninth. This highlights how swiftly risk priorities can change in an environment of constant disruption.
An Antifragile Approach
The central theme of this year’s report is the need for solutions that enable organisations to thrive amid chaos. The concept of “antifragility,” coined by academic Nassim Nicholas Taleb, describes systems that not only withstand stress but actually improve under it. For businesses, adopting an antifragile mindset means seeking opportunities in disruption and turning risk into a competitive advantage.
“For organisations to navigate this environment, they must now be alive to the risks they face but agile enough to respond in a way that keeps their business moving forward,” added Walker.
While nearly half of business leaders perceive their organisations as antifragile, only 7% describe their organisations as “risk welcoming,” and only 19% are very proactive in dealing with risk — key traits of antifragile businesses. Furthermore, just 26% of organisations have decentralised decision-making and responsibilities, a critical structure for supporting an antifragile approach.
The report also notes a significant shift in attitudes towards artificial intelligence (AI), with optimism decreasing. This year, 59% of business leaders view AI as an opportunity, down from 83% last year. This shift is likely due to a more pragmatic understanding of AI’s potential after a year of separating hype from reality.
Looking Forward
The rise in regulatory and supply chain risks presents opportunities for antifragile businesses to thrive. By adopting an antifragile mindset, organisations can start to change the way they think about risk, embracing opportunities, and being proactive rather than merely reacting to crises. This approach can ultimately help businesses thrive in times of disruption and emerge even stronger.
“Historically, most businesses have looked at risk in a negative way, as a threat to be minimised. But in a time of constant change, they need to embrace risk to seek advantage if they want to avoid standing still. In other words, they need to view risk not as a threat, but as an opportunity,” Walker concluded.
