Analysis of the WEF Global Risk Report for Corporate Australia

The World Economic Forum has released the 20th edition of the Global Risks Report which analyses both short-term (2 years) and long term (10 years) risks and categorises them in terms of ranking based on analysis of their Global Risks Perception Survey.

Complex themes dominate such as rapid technological advancements, shifts in global power, climate change, and changing population trends. As a result, the risks we face are becoming more complicated and urgent. These changes are driving a shift in the world order, marked by greater instability, divided opinions, a loss of trust, and rising insecurity. At the same time, current systems of governance seem unprepared to handle both existing and new global risks or to manage the weaknesses these risks create.

The short-term risks outlined in the Global Risks Report 2025 have specific implications for Australian businesses, given the country's unique economic, social, and environmental context.

“Certain Australian sectors are more vulnerable to the short-term risks identified in the Global Risks Report 2025”

Here Sention highlights which sectors are most vulnerable to the short-term risks described and what actions can be considered at the strategic level heading into 2025.

‍Mining and Energy

Risks:

• Geopolitical conflicts could disrupt resource exports (e.g., iron ore, coal, and LNG), particularly to China and Southeast Asia.
• Cybersecurity threats may impact operational technology and critical infrastructure.
• Pressure is mounting to decarbonise amidst climate and environmental risks.
• In addition, the U.S. has significantly boosted its fossil fuel production under the "America First" agenda, enhancing its energy independence and reducing reliance on imports. This shift has intensified competition in global energy markets, challenging Australian energy exports.

Mitigation Strategies:

• Strengthen cybersecurity defences for operational systems and data.
• Invest in renewable energy projects to align with global decarbonisation efforts.
• Build strategic stockpiles of resources and foster stronger trade relationships with diversified markets.

‍Financial Services

Risks:

• Cyberattacks are increasing, targeting sensitive customer and transaction data.
• Consumer trust is eroding due to misinformation and disinformation campaigns.
• Market volatility stemming from geopolitical tensions or extreme weather-related economic shocks is increasing.

‍Tourism and Hospitality

Risks:

• Extreme weather events could damage tourist destinations and reduce traveller confidence.
• Societal polarisation may influence consumer behaviour, including boycotts or preferences for domestic over international travel.
• Geopolitical risks could reduce international visitor numbers.

Mitigation Strategies:

• Promote sustainable tourism practices and build resilience into tourism infrastructure.
• Develop marketing strategies that emphasise safety and adaptability to changing circumstances.
• Diversify offerings to appeal to both domestic and international tourists.

‍Retail

Risks:

• Integration of AI-technology, training and resources could drive up retail costs.
• Manufacturing and importation costs rise due to impact of Trump’s America First policy changes.
• Expansion of e-commerce markets sees reduction in commercial property revenue.
• In addition, the U.S.-China trade tensions have led to supply chain uncertainties, impacting Australian industries connected to these markets.

Mitigation Strategies:

• Develop a well-defined digital strategy that aligns with company’s mission and objectives.
• Seek to diversify supply chain markets and strengthen networks.
• Review strategies to reduce impacts to retail space including space optimisation, partnerships, dark stores, integration of AR and VR instore.
• Reduce dependence on U.S.-China trade by sourcing alternative suppliers in Japan, South Korea, India, or within Australia.

‍Technology and Telecommunications

Risks:

• Risk of cyber-espionage and cyber-warfare is increasing, targeting critical digital infrastructure.
• Misinformation campaigns are affecting platform credibility and user trust.
• Regulatory pressures are increasing to moderate content and prevent the spread of disinformation.

Mitigation Strategies:

• Partner with government agencies to establish industry standards for cybersecurity.
• Use AI-driven tools to detect and mitigate disinformation on platforms.
• Develop disaster recovery plans to minimise downtime in case of cyberattacks.

‍Agriculture and Agribusiness

Risks:

• Extreme weather events (droughts, floods, bushfires) threaten crops, livestock, and supply chains.
• Trade disruptions from geopolitical tensions could impact exports, particularly to key markets in Asia.
• Rising insurance costs for properties and operations in disaster-prone areas.

Mitigation Strategies:

• Invest in climate-resilient practices, such as drought-resistant crops and precision agriculture technologies.
• Diversify export markets to reduce reliance on a few trade partners.
• Collaborate with government and insurers to develop risk-sharing schemes for natural disasters

“Effective risk management, including addressing emerging risks, will be key to building resilience in 2025”

These forecasted risks, exacerbated by the recent Trump administration executive orders, require immediate planning and strategic thinking. Effective risk management, including addressing emerging risks, will be key to building resilience in 2025. This will require businesses to conduct thorough assessments to identify vulnerabilities and develop contingency plans for complex threats, such as supply chain disruptions and cyberattacks. Building resilience will be equally important, including the development of infrastructure capable of withstanding extreme weather and the adoption of renewable energy and sustainable practices to mitigate long-term climate risks.

In addition, collaboration with industry groups, governments, and research institutions will allow businesses to share resources and expertise, while diversifying suppliers, trade partners, and customer bases may reduce dependency on specific regions or markets.

Embracing digital transformation by enhancing cybersecurity and utilising data analytics and AI, will enable businesses to further improve operational efficiency and advance risk prediction. Lastly, fostering transparency in business operations and proactively addressing misinformation through clear and consistent communication will help build trust with customers and stakeholders, creating a competitive edge in what will be another complex year.

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