by Jim Burdett
As we head towards the third decade of the 21st century, a state of perpetual global crisis appears to be ever more normalised. Emerging threats encompass both novel and familiar risks in both new and known contexts. Established risks such as extreme weather events are escalating in both frequency and intensity while novel risks are arising from areas such as technology, population movements and geopolitical developments.
Disaster events reported per year have increased significantly in the last 2 decades. Between 1970 and 2000, reports of medium- and large-scale disasters averaged around 90–100 per year, but this increased dramatically between 2001 and 2020 as the reported number of such events increased to 350–500 per year. (United Nations Office for Disaster Risk Reduction, 2022).
Patrick Lagadec highlighted that hypercomplex 21st Century crises rule traditional theories and best practices redundant at best and dangerous at worst. The accepted crisis management practice and philosophy in the latter part of the 20th Century can no longer be developed in a linear fashion to address extreme events of today. Lagadec uses the term “wilderness of the unknown” (Lagadec, 2009, p. 478) to conceptualise the idea that a response plan mapped on previous experience is no longer valid. If an emerging phenomenon lacks a historical precedent, then inherently there will be a lack of clear response strategy.
In his forward to the National Risk Register 2023, the Rt Hon Oliver Dowden highlighted the main threats to the United Kingdom focusing on global events such as armed conflict, pandemics, climate change and technology developments such as Artificial Intelligence (HM Government, 2023). These threats don’t exist in isolation. As Charles Perrow identified back in the 1980s, we are operating within “tightly coupled” systems creating vulnerabilities and fragility. The grounding of the container ship Ever Given in 2021 was a single incident which prevented an estimated $9.6 billion dollars trade per day (BBC, 2021). The resulting global supply chain shortages impacted a wide range of goods for many months after the Ever Given was refloated and the Suez Canal reopened.
Geopolitical changes
Although the absolute number of deaths due to war has been declining since the end of World War 2, wars and armed conflicts have been on the rise since 2012 (United Nations, 2024). Russia’s 2022 invasion in Ukraine and the Isreal-Hamas conflict continue to claim the lives of many and dominate western news, but these are just two of the 56 active global conflicts in 2024 (Institute for Economics and Peace, 2024). The causes of these conflicts are complicated and varied, often stemming from a combination of factors including economic, political, ethnic and religion.
Russia has justified its invasion into Ukraine as necessary to take back territory that was formerly part of the Soviet Union and to protect ethnic Russians. While the reality is undeniably more complex, it’s clear that Moscow aims to maintain a buffer zone around its borders, preventing former Soviet nations from aligning more closely with the European Union and NATO. This geopolitical crisis has led to economic impacts on other nations globally through price increases due to both declining production within Ukraine and economic sanctions levied on Russia affecting key exports such as oil and gas (Hanappi, 2022). Unlike the United States, Europe is a net importer of oil and gas posing strategic risks to its energy supply security.
Sanctions on Russia has seen its gas imports into the EU drop from over 40% in 2021 to about 8% in 2023 (European Council, 2024) highlighting the risk of import energy dependency.
The Hamas assault on Israel in October 2023 leading to the killing 1200 people and the capture of over 250 hostages is the latest episode in a long-running dispute since the 1948 Arab-Israeli war and the displacement of hundreds of thousands of Palestinians. Although primarily a conflict on ethnic and religious grounds between Jews and Arabs, it has a global impact and is a source of ongoing tension between Arab and Western nations. The support for Israel from the United States has long been used as justification for attacks from extremist terrorist groups such as the Al Queda attacks of 9/11. Europe is not immune from jihadist terrorism with deaths peaking in 2015 at 150, notably from the coordinated mass Paris attacks responsible for 138 deaths.
Tensions between mainland China and the island of Taiwan remain high, with the potential for armed conflict a real concern. Taiwan, a self-governing island nation of 23 million people, has operated independently since 1949. Ethnic Chinese settlers arrived in the seventeenth century and it was annexed by the Qing dynasty in 1684 before being governed as a colony by Japan for 50 years until 1945. The Republic of China fled to Taiwan in 1949 after losing the civil war to the Communists. Taiwan maintains its own democratically elected government and functions as an independent nation, although it has never formally declared independence (Albert, 2016).
The relationship between China and Taiwan continues to be tense with China asserting its sovereignty under the “one China” principle. Taiwan, however, retains the backing of the United States which seeks to maintain regional peace and stability while also checking Chinese expansion. Technology is a key driver in diplomatic developments with Taiwan due to its position as a global leader in semiconductor manufacturing. As the AI revolution continues to gather pace, access to the supply of semiconductors is essential and Western nations will be reluctant to see China take control of this.
The interventionist role of the USA as a global peacekeeper has been less clear cut since the end of the Cold War when it was no longer obligated to deter the USSR which ceased to exist in 1991. Donald Trump’s “America First” strategy was a key electoral topic in this years’ Presidential elections. Some commentators, such as Former Vice President Mike Pence in his foreign policy address to the Hudson Institute in 2023, argue that this agenda promotes United States isolationism (Hudson Institute, 2023).
The National Security Strategy 2017 from Trump’s first term of office does, however, state that the president looks to “1 protect the homeland, 2 promote US prosperity, 3 leveraging strength to preserve peace, and 4 advance US influence in the world” (Weaver, 2018, p. 4). This might suggest that the aim of the United States is to maintain its’ global influence by adapting to new global circumstances, rather than retreating into isolationism.
The relative stability of the post-Cold war era has given way to rising geopolitical conflict involving both traditional and non-traditional methods. Whilst an armed invasion of the United Kingdom mainland might be an unlikely prospect we have seen state-sanctioned killings on UK soil, such as the 2006 killing of Alexander Litvinenko by Russian agents and the attempted murder of Sergei and Yulia Skripal in 2018 which killed an innocent British woman.
Although these examples of state-backed activities have happened directly on home soil, the more common threat is from non-violent hybrid campaigns: a so-called “grey zone” between open conflict and peace involving cyber-attacks, disinformation campaigns and illicit funding of opponent groups. An example are the North Korean state-sponsored hacking teams that have conducted numerous destructive attacks to disrupt data centres and raise large amounts of money through ransomware attacks, such as the highly disruptive and costly 2017 WannaCry 2.0 incident (U.S Dept. of Justice, 2018).
Climate change
The evidence is undeniable that the earth’s average surface temperature in 2023 was the warmest on record since accurate record-keeping began in the late 19th century and Earth is now 1.36 degrees Celsius warmer overall than the 19th century pre-industrial average (NASA, 2024). This warming trend correlates directly with increased fossil fuel consumption and CO2 emissions strongly suggesting a human-induced impact on the climate. Carbon dioxide measurements taken at the Mauna Kea Observatory in Hawaii have shown an increase of 35% since monitoring began in 1958 and the current emissions trajectory projects a global temperature rise of between 2.1°C and 3.9° C by the end of the century. (Gabric, 2023)
The Paris Agreement, adopted by 196 countries at the 2015 United Nations Climate Change Conference, set ambitious goals: limiting global temperature rise to well below 2°C above pre- industrial levels and striving for a more ambitious 1.5°C target. While this global effort is laudable, ensuring equitable action among signatory nations presents significant challenges.
There is a strong correlation between economic development and fossil fuel consumption. In 2023 per capita fossil fuel consumption in the United States was 62,066kWh, almost 10 times that of India at 6,768kWh (OurWorldInData, 2024). This disparity highlights the need for a balanced approach that considers both historical emissions and future development needs.
A World Bank report shows that climate change disproportionately hits the poorest regions of the world in Africa and Asia and can potentially push 100 million people back into poverty over the next 15 years as they suffer the effects of natural disasters, crop yield losses and diseases. (Hallegatte, Bangalore, Bonzanigo, & Fay, 2016)
It is totally understandable that less developed countries will be reluctant to reduce their fossil fuel consumption to the detriment of their economic development even though poorer countries and communities are disproportionately affected by climate change. Likewise, the highest consumers of fossil fuels may also be reluctant to take any action which may harm their economic growth. An illustration of this was the announcement by Donald Trump that his incoming administration will withdraw the United States from the UN Paris Agreement on climate change.
Many developing nations, such as India, expressed disappointment with the outcomes from the recent COP29 in Azerbaijan stating that payments from wealthy nations for adaptation and mitigation coupled with reductions in fossil fuel usage were insufficient. Ed Milliband, UK Energy Minister, stated that there was a lot more work to do to keep the 1.5C increase within reach.
Technology and Artificial Intelligence
The term “General Purpose Technology” (GPT) is used to describe a development that has the potential to transform economies and society. Defined by Lipsey et al. as “a single generic technology, recognisable as such over its whole lifetime, that initially has much scope for improvement and eventually comes to be widely used, to have many uses, and to have many spillover effects.” (Lipsey, Carlaw, & Bekar, 2005, p. 98)
Classic examples of transformative technologies, such as the wheel and steam engine, have revolutionised industries, spurred economic growth, and reshaped societies. Recent breakthroughs in artificial intelligence (AI) have the potential to trigger the next industrial revolution. It may be coincidental that one of the best-known AI large language models is called ChatGPT, although in this case “GPT” officially stands for “Generative Pre-Trained Transformer”.
Technology and AI have the potential for both negative and positive impacts on society. The development and deployment of AI requires extensive datacentres requiring both land and electricity. This potential for adding to already problematic carbon emissions is an issue that will require mitigating through adoption of carbon-free sources of electricity and sustainable construction technology.
AI datacenters require enormous computational power and are controlled by a handful of key players such as Microsoft, Amazon, Google, IBM and Huawei. The high barriers to entry throw up important questions about how these companies can be regulated in the future to ensure fairness of opportunities rather than just reinforcing and consolidating existing positions.
Competition laws and regulations relating to AI are rapidly evolving. The European Union implemented the Digital Markets Act in 2022 to ensure that digital markets remain free of monopolistic practices and to promote the safe and ethical use of AI. The European AI Office was established in 2024 to oversee the enforcement and implementation of the AI Act which came into force in August 2024 setting out governance rules for AI models. The United Kingdom published its’ own National AI Strategy in 2021 setting out it’s 10 year vision of how to utilise AI to enhance the general industrial strategy to boost economic growth (HM Government, 2021).
The United Kingdom is still awaiting specific AI legislation after the Artificial Intelligence (Regulation) Bill lapsed with the dissolution of Parliament ahead of the general election in July 2024.
Technology has also facilitated the development of cryptocurrency, such as Bitcoin, which has seen a rapid expansion since its’ inception in 2009 and is now valued at around $2.02 trillion (as of September 2024) according to coinmarketcap.com. Cryptocurrencies rely on blockchain technology to manage transactions, bypassing traditional banking systems. The privacy offered by cryptocurrency coupled with its cross-border capabilities has seen its use rapidly adopted by criminals seeking to evade detection.
It is the currency of choice on dark web markets for illegal goods such as drugs and guns and is often demanded as the payment method in ransomware attacks. As cross-border crime highlights the difficulties of transnational investigations, reducing the ability to channel illicit funds through cryptocurrency may well prove pivotal in reducing criminality such as ransomware and sales of illegal products on the dark web.
Urbanisation/population changes
United Nations data show the world being reshaped by population growth, aging, urbanisation and migration (United Nations, 2024). Recent political developments have seen a renewed focus on immigration which has been a key focus of many of the more populist movements.
This population growth is not spread evenly around the world. 28% of the world’s population in 2024 live in countries where the population has already peaked e.g China, Germany and Japan. Others, including several of the world’s most populous countries such as India, Nigeria and the United States, are not expected to reach peak population until the end of the century. Although population growth may be slowing in some countries the overall prediction of an additional 2 billion people globally by the mid-2080s still adds significant economic pressures on food, housing, infrastructure and services.
Following the COVID 19 pandemic, global life expectancy is once again on the rise and it is predicted that by the late 2050s more than 50% of all deaths will occur at age 80 or higher. Furthermore, by 2080 it is predicted that there will be more people aged 65 or older compared to children under 18. This aging demographic has implications for traditional expectations of working lives and post-retirement pension funding. As the number of people in retirement rises coupled with the additional length of time receiving pension payments, tax-funded models of pension payments will come under greater strain and pressure will increase to raise retirement ages. Keeping people in the workforce for longer, however, may be a necessity for economic development in the face of a static or shrinking population. This then raises questions of whether older people will be able to do the same work as younger people due to both skills and physical abilities. Technology may be able to compensate to some degree to an age- related decline in cognitive and physical ability, but lower skilled workers could potentially be disproportionally disadvantaged.
Immigration is expected to be the main driver of population growth in 52 countries over the next quarter century. This group includes Australia, Saudi Arabia and the United States where it played a key role in electoral discussions. The effects of emigration on population growth by birth tends to be relatively minimal and has more statistical relevance for smaller countries, such as Albania, Jamaica and Bulgaria.
In addition to population growth being unevenly spread globally, there has also been a move from rural to urban settlement. Megacities, defined as having populations greater than 10 million people, are now home to 55% of the world’s population. It is expected that this will grow to 66% of the world’s population by 2050 (Valavanidis, 2024). The 1 million people around the world moving each week from rural areas to big cities, do so to seek increased job opportunities, higher income, and better access to education, health and social opportunities. Rapid urbanisation, however, adds demands on infrastructure, presents environmental challenges and can exacerbate social and economic disparities.
The rapid growth of megacities adds considerable pressure on housing and coupled with weak governance can lead to the growth of slums. Slum growth in Africa follows decades of civil war, emigration, segregation, economic and governmental failure. Organic growth of informal and unplanned settlements will lead to pressures on fresh water and electricity supplies. Climate change and increased temperatures just add further stress on these resources.
Pandemics
The COVID-19 pandemic of 2020 focused the world’s attention on the dangers of public health issues, but the World Health Organization has actually made eight formal declarations concerning a public health emergency of international concern (PHEIC) since 2005. Defined as: “an extraordinary event which is determined to constitute a public health risk to other States through the international spread of disease and to potentially require a coordinated international response” (World Health Organization, 2005)
While the COVID-19 pandemic served as a stark reminder, global leaders have long warned of the significant risks posed by pandemics. Bill Gates gave a TED talk on the subject of such an outbreak in 2015, optimistically stating that the containment of the Ebola virus might serve as a wake-up call to the world. Indeed, both the United Kingdom and the United States both ran national level pandemic exercises (UK-Exercise Cygnus 2016, USA Exercise Crimson Contagion 2019) (Rubens, 2023)
Despite these early warnings and the obvious impacts of the COVID-19 pandemic, it hasn’t necessarily followed that the world has now become more attuned to the dangers and, therefore, more prepared to invest in pandemic resilience planning.
During the COVID-19 pandemic the World Health Organisation (WHO) was widely criticised particularly by Donald Trump in the United States. The historical successes of WHO have given it a good reputation for legitimacy as an international organisation, however during the COVID-19 pandemic it was particularly criticised by the Trump administration who sought to portray it as being controlled by foreigners and incompetent. In addition to merely seeking to de-legitimise the WHO, the Trump administration also suspended funding and initiated a formal withdrawal in May 2020.
Media coverage favouring politicians over experts furthered this anti-WHO rhetoric and social media then echoed and solidified this tone. This allowed a populist leader like Trump to shift the blame for the pandemic away from the government. (King & Lugg, 2023)
Developments of Positive Solutions in the Strategic Risk Management Profession
Artificial Intelligence (AI) and Machine Learning (ML) are being used to enhance strategic risk management through its ability to quickly analyse vast amounts of data. One prominent application is the monitoring of live CCTV feeds enabling real-time decision making and proactive security measures. The ability of AI is being utilised to enable more accurate prediction on natural disasters, such as tsunami and earthquakes.
Tsunami prone nations such as Indonesia are now able to make use of real-time tsunami early warning systems based on machine learning to save vital minutes as well as providing accurate predictions of arrival time and height of the tsunami on the coast (Pradana, Wiguna, Rusdiutomo, Saputri, & Wibowo, 2022). The financial sector is another example of how AI can be utilised to reduce operational risk by analysing huge volumes of trades in order to detect financial fraud and money laundering.
In the late 20th and early 21st centuries there has been a move towards integrating Enterprise Risk Management (ERM) as a vital strategic tool across an organisation rather than viewing it as a compartmentalised compliance function. Integrating risk with strategy allows organisations to become proactive rather than reactive by identifying both threats and opportunities. ERM frameworks such as the International Organisation for Standardization (International Organization for Standardisation, 2018) provide for common methods, language and practices in addition to providing structure and consistency for the development of risk management as a recognised profession.
Developments in regulatory frameworks, such as the forthcoming Digital Operational Resilience Act (DORA), which imposes requirements on EU operators to ensure adequate security against digital threats, are key tools in improving security and resilience. These regulatory frameworks drive a more robust and standardised approach to risk and resilience benefitting both organisations and consumers.
Conclusion
The global risk horizon is complex and ever-evolving. Inter-connected factors such as climate change, geopolitical events, technological advancements and pandemics all combine to make predicting the future difficult and rendering accepted crisis management practice based on the analysis of previous events ineffective. As Patrick Lagadec postulated 15 years ago, we cannot look backwards to develop strategies to handle the crises of the future. Building future resilience will require that skills and capabilities are in place to handle emerging threats and challenges.
The relative stability of the post-cold war era has given way to rising geopolitical conflict. The role of the United States in the global world order continues to evolve and the recent election results only add to the uncertainty over its future posture. Describing the incoming Trump administration as isolationist is possibly an oversimplification, ignoring its historical approach to foreign policy stemming back to the Monroe Doctrine of 1823 which stated that US would not interfere in European affairs, and would not tolerate European interference in the Americas. If not new, Trumps’ “America First” policies are certainly aimed at maintaining the status of the United States as the global economic superpower by adjusting to new circumstances and opportunities.
Population movements have provoked a populist backlash and created a narrative where an isolationist stance is seen to be in the national interest. This was highlighted in the Brexit referendum in the United Kingdom and the rise in populist political parties, such as the Alternative für Deutschland in Germany which is Eurosceptic and anti-immigration. The move to urbanisation and the development of mega cities, whilst offering potential for economic development, also comes with risks due to increased pressures on land and resources.
Effective urban planning and governance are essential and technological developments will be required to solve the urbanisation issues of today. An effective city of the future may well require many of the futuristic features of the proposed Neom project in Saudi Arabia such as integrated transport networks and energy neutral buildings. The challenges and costs of providing this may prove easier for wealthy nations with powerful governance structures.
The world will need to navigate around ongoing economic and climate challenges as well as geopolitical conflicts, but the next two decades will be marked by rapid technological change. Despite the initial pessimism of traditional bankers and economists, cryptocurrency is here to stay and will, thus, require both national and global regulatory frameworks to be built around it to both protect consumers and prevent its use for illicit purposes. Artificial intelligence and machine learning, whilst creating challenges of their own, also offer the promise of real-time analysis and pre-emptive notification of risks.
The evolution of AI into technologies such as autonomous weapons systems where lethal force can be deployed without human intervention will require effective governance on their usage. The 1987 film Robocop where an out of control law-enforcement droid kills an innocent bystander gave an early portent of the potential dangers of AI controlled lethal force.
A common feature of many crises related to pandemics, global warming and cyber-attacks is that geographical or national boundaries don’t constrain them. As nationalism and anti- globalisation sentiments rise around the world, the challenge remains in overcoming this prisoner’s dilemma of balancing national and global interests to effectively manage many of these evolving global risks.
The involvement of multiple stakeholders makes effective management complex and unpredictable as it requires collaboration between both nations and organisations, each of which may have different priorities and values. The role of international organisations in achieving global aims will be made increasingly more difficult if powerful nations, such as the United States, attempt to de-legitimise them to further national political agenda.
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