Businesses operating across borders are facing slowing growth and an increasing battle for long-term sustainability, according to a new report from KPMG International.
The findings in KPMG’s Top risks forecast: Bottom lines for business in 2024 and beyond shine a light on the multifaceted, complex challenges facing companies looking to grow internationally at a time of increasing divergence on regulation, conflict, technological advancement and political uncertainty.
The report’s analysis identified the three most critical risks for businesses right now, known as ‘bottom lines’, likely to impact operations this year and beyond.
Global trade restrictions have been on the rise, with approximately 3000 restrictions imposed, nearly tripling since 2019. This trend of protectionist trade policies poses challenges for organisations operating in international markets. Such restrictions can create barriers and hinder economic growth, affecting supply chains and market access. Organisations should be prepared to navigate these trade policy restrictions and explore alternative strategies to mitigate potential disruptions.
The geopolitical landscape is characterised by increasing vulnerability, driven by various factors such as rapid technological advancements, climate change, and geopolitical tensions. In 2023, a staggering 91 countries were involved in some form of conflict, a significant increase from 58 in 2008.This escalation of conflict has a profound impact on the global economy, with conflict estimated to have a 12.9 percent impact on global GDP. To mitigate the risks associated with vulnerability, organisations must prioritise operational resilience. This involves implementing proactive risk management practices, conducting scenario planning, diversifying supply chains, and strengthening cybersecurity measures.
Artificial Intelligence (AI) has become a transformative force across industries, with investment in AI increasing more than fivefold between 2013 and 2023. While AI presents immense opportunities, it also brings about governance gaps that organisations must address. Ethical and responsible AI deployment is crucial to maintain trust among stakeholders. Organisations should prioritise transparency, accountability, and fairness in their AI systems to mitigate potential risks and ensure its responsible integration into their operations.
Stefano Moritsch, Global Geopolitics Lead at KPMG International, said: “Last year alone, 91 countries were involved in some form of conflict, which led to an almost 13 percent hit on global GDP, according to data from the Institute for Economics & Peace. To some extent the Covid pandemic was a rehearsal for some of the broader risks and profound threats facing companies today. Leaders have developed a degree of resilience but, for the first time in modern history, they’re facing challenges on multiple fronts – from conflict to complex regulation, climate change and a ‘patchwork’ adoption of AI in different nations and regions.”
