Economic downturn now perceived a bigger threat to business than ransomware

Leading business executives have grown more fearful of a looming macroeconomic downturn in 2022, more so than ransomware attacks or the effects of the Russian invasion of Ukraine.

Data released by Gartner this week for Q2 2022 showed that ransomware has slipped to the third-most feared emerging risk to businesses, overtaken by economic uncertainty after it took the top spot in Q1.

The potential economic downturn jumped from fifth to first between Q1 and Q2 of 2022, Gartner’s Emerging Risk Reports showed.

The top five emerging risks to business - Q2 2022:

1. Macroeconomic downturn
2. Escalation of conflict in Europe
3. State-sponsored cyber attacks
4. Energy price inflation
5. Key material shortages

“The top five risks reported by respondents were notable both for their interconnectedness and origination outside of the organisation,” said Chris Matlock, vice president at the Gartner legal, risk and compliance practice.

“While interconnected, many of the top risks send conflicting signals on the state of the economy, which makes the role of emerging risk management (ERM) leaders especially crucial in filtering the most relevant, organisation-specific information up to the c-suite and board.”

Gartner said it was ‘notable’ that all of the top five risks were external factors – outside the direct control of a business – and the impact of each would be felt differently depending on the industry and location of the business.

The leading risk, macroeconomic downturn, was described by Gartner as a high-impact factor on businesses, the full effects of which are expected to be felt over the next two years.

A shortage in key materials will also be a high-impact factor that affects businesses within a year, it said. Many technology companies are already reeling from supply chain issues, chiefly from the semiconductor shortage.

State-sponsored cyber attacks are considered high-impact for businesses, too, with Gartner predicting the fullest effects of the threat to be felt between one and two years in the future.

The most-feared risks are likely to be long-term influencers on business decisions, the analysts said. There is no apparent date by which the conflict in Ukraine will end, nor is there one for the associated sanctions placed on Russia by global nations.

Businesses are advised to continually reassess their macroeconomic outlook and regularly conduct both top-down and bottom-down risk assessments, balancing the findings from each.

They are also advised to embrace the risks presented to their industry and use them as an opportunity for understanding that could eventually propel a company ahead of competitors.