According to some experts, risk management is divided into several types. Some of them divide risk management into 2 types of groups which are systematic and unsystematic risks. However, what is the risks faced by Board Members & Executives for an organization in 2022? Here are the top five risks that will be faced in 2022.
"Good risk management fosters vigilance in times of calm and instills discipline in times of crisis" - Dr. Michael Ong
Risk Management
Risk management is needed in any organization or company because it helps organizations consider the various risks that they will face. However, risk management covers various types of risks and these fields are very broad. This risk management will also go through several processes such as the process of identifying, assessing, and controlling threats to the capital and income of the organization. Therefore, some organizations need to know what risks they have to face because these sources of risk also come through various sources including financial uncertainty, legal responsibilities, technological problems, strategic management errors, accidents, and natural disasters.
Top 5 Risks Faced in 2022
1. (New) Government Policies Risk: Dealing with Pandemics May Lead to Regulations and Protocols That Significantly Affect How Businesses Are Conducted and Its Performance.
The Covid-19 pandemic that hit the world has influenced the formation of this new risk. As one of the measures to curb the spread of this pandemic, governments in each country have taken some initial steps by implementing new policies, rules, and regulations on travel and border control, public health practices, and social distance which have largely resulted in business and trade activities being temporarily closed.
Due to the lack of experience and standard operating procedures (SOP) to deal with the global health crisis, not to mention the nature of the Covid-19 pandemic which is easily spread and growing very fast, it adds to the risks that must be faced by organizational and company owners. Policy reviews and reforms need to be constantly reviewed and updated by leaders resulting in a level of uncertainty for business owners as they strive to maximize the performance of their organizations.
2. Economic Risk: Restriction of Growth Prospects in Economic Markets Associated with Some Exceptions
As the percentage of Covid-19 cases increases, the rate of concern related to overall economic problems in domestic and international markets is also increasing, especially in early 2021. The economic situation is particularly affected when unemployment levels also increase due to COVID-19 lockdowns and restrictions. This also includes uncertainty over how long this pandemic will last and continue to represent a major challenge in many industries. Although now the economy is improving, it is still a concern for the industry that depends on the gathering of people.
3. (New) Consumer Behavior Risk: Market Conditions and Shifts in Consumer Behavior That Continue to Experience Customer Demand
The Covid-19 pandemic has forced almost entire organizations from all types of industries to change the way they deliver products and services to their customers. Lockdowns, social distancing, and workforce transitions have affected the way customers find and buy products and services. Most industries are beginning to adopt a variety of new innovative ideas and apply the maximum use of technology.
Among the new things used during this pandemic are such as remote working, click and collect, online class, 24/7 video health care, online shopping, home delivery, digitization, automation, etc. As a result, if the following situations become a habit it will cause consumers to adopt new purchasing behaviors and delivery methods and can negatively impact demand for organizations that do not innovate and respond to these changes.
4. Digital Technology Risks: The Application of Digital Technology in Transforming Business Requires New Skills That Many Organizations Cannot Acquire
The current situation that limits the gathering of people has caused some large companies to start applying the use of advanced technology widely. This will indirectly cause some other industries to slowly begin to replace the use of humans in their work systems. According to expert forecasts in 2030 many intermediate jobs will lose their jobs due to the widespread use of this technology.
The application of this increasingly widespread use of technology requires many industries to improve both their services and products by upskilling and reskilling their employees. The risk is now going to happen to many organizations or companies that are unable to improve the skills of their employees because it definitely requires very high costs.
5. Privacy Risk: Privacy and Identity Management
Developments in the use of technology have created other risks, which are the privacy and identity management risks. The dissemination of user data collected and sent to various types of organizations and across international borders increases the operational challenges associated with tracking, warehousing, and protecting data. Complicating data privacy spaces are also increasingly requiring users to know about how to make the right decisions over what data is gathered and why, as well as how it is secured.
Final thought.
The risks can be taken seriously by board members and executives so that they are better prepared for anything that may happen. Most of the risks were due to the impact on Covid-19 pandemics that are and still are plaguing around the world. The list of risks above also shows the development of the use of digital technology, as well as the increase in the risks of its widespread use that may in the next 10 years, affect 100% of the world economic system.
However, not all of the risks mentioned above will continue to be risks in the top ten for years to come. Therefore, preparations should always be made by each board member and executive for the well-being of their organization or company.