{"id":21998,"date":"2024-06-12T20:01:36","date_gmt":"2024-06-12T20:01:36","guid":{"rendered":"https:\/\/www.insurance-canada.ca\/?p=81042"},"modified":"2024-06-12T20:01:36","modified_gmt":"2024-06-12T20:01:36","slug":"geopolitical-uncertainty-trade-restrictions-and-divergence-on-ai-top-risks-to-growth-for-global-companies","status":"publish","type":"post","link":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/2024\/06\/12\/geopolitical-uncertainty-trade-restrictions-and-divergence-on-ai-top-risks-to-growth-for-global-companies\/","title":{"rendered":"Geopolitical uncertainty, trade restrictions and divergence on AI top risks to growth for global companies"},"content":{"rendered":"<h3>New KPMG International report reveals the three key risks to growth in 2024 and beyond<\/h3>\n<ul>\n<li><strong><em>Divergence on AI governance, geopolitical vulnerability and trade policy restrictions threatening long-term sustainable growth for many organizations<\/em><\/strong><\/li>\n<li><strong><em>Energy and natural resources sector \u2018most exposed\u2019 industry group in 2024<\/em><\/strong><\/li>\n<\/ul>\n<p>Toronto, ON (June 1, 2024) \u2013 Businesses operating across borders are facing slowing growth and an increasing battle for long-term sustainability, according to a new report from KPMG International.<\/p>\n<p>The findings in KPMG\u2019s <em>Top risks forecast: Bottom lines for business in 2024 and beyond<\/em> 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.<\/p>\n<p>The report\u2019s analysis identifies the three most critical risks for businesses right now, known as \u2018bottom lines\u2019, likely to impact operations this year and beyond:<\/p>\n<ol>\n<li><strong>Trade policy restrictions:<\/strong> Global trade restrictions have been on the rise, with approximately 3,000 restrictions imposed, nearly tripling since 2019. This trend of protectionist trade policies poses challenges for organizations operating in international markets. Such restrictions can create barriers and hinder economic growth, affecting supply chains and market access. Organizations should be prepared to navigate these trade policy restrictions and explore alternative strategies to mitigate potential disruptions.<\/li>\n<li><strong>Vulnerability calling for operational resilience:<\/strong> The geopolitical landscape is characterized 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, organizations must prioritize operational resilience. This involves implementing proactive risk management practices, conducting scenario planning, diversifying supply chains and strengthening cybersecurity measures.<\/li>\n<li><strong>AI Governance Gaps<\/strong>: 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 organizations must address. Ethical and responsible AI deployment is crucial to maintain trust among stakeholders. Organizations should prioritize transparency, accountability, and fairness in their AI systems to mitigate potential risks and ensure its responsible integration into their operations.<\/li>\n<\/ol>\n<p>KPMG\u2019s team of geopolitical experts and global sector heads have also developed a heat map looking at the impact of the top risks on individual key sectors. The analysis reveals the world\u2019s Energy and Natural Resources industry is the most exposed to risks, driven especially by uncertainty in the Middle East and the increasing politicization of access to minerals and crucial resources. The Infrastructure industry and Financial Services are second and third, with both facing threats from AI governance gaps and growing economic headwinds.<\/p>\n<p>In KPMG\u2019s analysis, the Energy and Natural Resources sector also recorded the lowest Financial Performance Index (FPI) score amongst all sectors. The FPI, a measure of financial health, is based on data from over 40,000 companies globally. A lower score suggests underperformance and potential financial instability within the sector. This underperformance highlights the urgent need for companies within this sector to reassess their strategies, manage risks effectively and adapt to changing market conditions to improve their financial health.<\/p>\n<p>\u201cLast 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 &amp; Peace,\u201d says Stefano Moritsch, Global Geopolitics Lead at KPMG International. \u201cTo some extent the COVID-19 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\u2019re facing challenges on multiple fronts \u2013 from conflict to complex regulation, climate change and a \u2018patchwork\u2019 adoption of AI in different nations and regions.\u201d<\/p>\n<p>With IMF data revealing that global trade restrictions have nearly tripled to 3,000 since 2019, it\u2019s clear that companies are facing a new reality. &nbsp;The KPMG report sets out 5 first steps CEOs can take today:<\/p>\n<ol>\n<li>Conduct a comprehensive risk assessment<\/li>\n<li>Stay informed and monitor geopolitical developments<\/li>\n<li>Diversify supply chains<\/li>\n<li>Enhance operational resilience<\/li>\n<li>Foster strong stakeholder relationships.<\/li>\n<\/ol>\n<p>\u201cThe data may make for some sobering reading for business leaders, but there are actions they can take today to ensure long-term viability and sustainability,\u201d adds Stefano Moritsch. \u201cCEOs and other senior execs need a laser focus on supply chains efficiency and security, while navigating complex national industrial policies and trade measures. On politics \u2013 something companies have often shied away from \u2013 it\u2019s simply a consideration that now needs to be in the board room. Profit alone can no longer be the only consideration. On AI policy, it\u2019s also evident that we\u2019re seeing different approaches in different territories. It\u2019s incumbent on companies to take AI strategy into their own hands, rather than waiting for a harmonized global regulatory framework in the context of a multipolar world. And on regulation, including ESG, business leaders should develop or embrace the tools available to provide live analysis of threats and new rules to stay ahead of the game. To effectively navigate the geopolitical risks, organizations and their leaders ultimately need to take proactive steps today to mitigate tomorrow\u2019s potential challenges.\u201d<\/p>\n<p>Read the report in full: <a href=\"https:\/\/kpmg.com\/xx\/en\/home\/insights\/2024\/05\/top-risks-forecast.html\" target=\"_blank\" rel=\"nofollow noopener noreferrer\"><strong>Top risks forecast: Bottom lines for business in 2024 and beyond<\/strong><\/a>.<\/p>\n<h4 class=\"smallhead\"><b>About KPMG in Canada<\/b><\/h4>\n<p>KPMG LLP, a limited liability partnership, is a full-service Audit, Tax and Advisory firm owned and operated by Canadians. For over 150 years, our professionals have provided consulting, accounting, auditing, and tax services to Canadians, inspiring confidence, empowering change, and driving innovation. Guided by our\u202fcore values\u202fof Integrity, Excellence, Courage, Together, For Better, KPMG employs more than 10,000 people in over 40 locations across&nbsp;<span class=\"xn-location\">Canada<\/span>, serving private- and public-sector clients. KPMG is\u202fconsistently\u202franked one of&nbsp;<span class=\"xn-location\">Canada\u2019s<\/span>&nbsp;top employers and one of the best places to work in the country.<\/p>\n<p>The firm is established under the laws of&nbsp;<span class=\"xn-location\">Ontario<\/span>&nbsp;and is a member of KPMG\u2019s global organization of independent member firms affiliated with KPMG International, a private English company limited by guarantee. Each KPMG firm is a legally distinct and separate entity and describes itself as such. For more information, see\u202f<a href=\"https:\/\/kpmg.com\/ca\/en\/home.html\" target=\"_blank\" rel=\"nofollow noopener\">kpmg.com\/ca<\/a><\/p>\n<h4 class=\"smallhead\"><b>About KPMG International<\/b><\/h4>\n<p>KPMG is a global organization of independent professional services firms providing Audit, Tax and Advisory services. We operate in 146 countries and territories and in FY20 had close to 227,000 people working in member firms around the world. Each KPMG firm is a legally distinct and separate entity and describes itself as such. KPMG International Limited is a private English company limited by guarantee. KPMG International Limited and its related entities do not provide services to clients. Learn more at&nbsp;<a href=\"https:\/\/home.kpmg\/xx\/en\/home.html\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">www.kpmg.com<\/a>.<\/p>\n<p class=\"referencetext\"><em>Source: KPMG LLP<\/em><\/p>\n<p>Tags: <a href=\"https:\/\/www.insurance-canada.ca\/tag\/artificial-intelligence\/\" rel=\"tag\">Artificial Intelligence (AI)<\/a>, <a href=\"https:\/\/www.insurance-canada.ca\/tag\/growth\/\" rel=\"tag\">growth<\/a>, <a href=\"https:\/\/www.insurance-canada.ca\/tag\/kpmg\/\" rel=\"tag\">KPMG<\/a>, <a href=\"https:\/\/www.insurance-canada.ca\/tag\/top-risks\/\" rel=\"tag\">top risks<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>New KPMG International report reveals the three key risks to growth in 2024 and beyond Divergence on AI governance, geopolitical vulnerability and trade policy restrictions threatening long-term sustainable growth for many organizations Energy and&#46;&#46;&#46;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[],"tags":[1],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts\/21998"}],"collection":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/comments?post=21998"}],"version-history":[{"count":0,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts\/21998\/revisions"}],"wp:attachment":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/media?parent=21998"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/categories?post=21998"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/tags?post=21998"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}