Top 5 Threats Businesses Face in the Next 5 Years As per the report, 52 per cent of respondents cite market volatility as one of the top concerns over the next five years.

As businesses across the globe navigate an increasingly uncertain environment, understanding and managing emerging risks has become a critical priority. The joint research report by TATA AIG and Dun & Bradstreet, titled "Navigating the Emerging Risk Landscape," provides a timely and insightful snapshot of the top risks that businesses anticipate will pose significant threats over the next five years. By identifying and monitoring these risks, organizations can better prepare themselves to mitigate potential disruptions and capitalize on new opportunities.

Navigating Financial Volatility

Global economic turbulence is making it increasingly difficult for businesses to maintain financial stability. Rising interest rates, inflation, market instability and the specter of economic recessions in major economies such as the US, China and Europe are heightening concerns. These issues are compounded by geopolitical tensions, supply chain disruptions and trade restrictions. As per the report, 52 per cent of respondents cite market volatility as one of the top concerns over the next five years. For businesses, this presents a dual challenge; maintaining profitability while protecting investments in a turbulent economic climate.

Deepak Shetty, former secretary to the Government of India and Director General of Shipping, stated, "At the international level, there is a rise of ultranationalism in various parts of the globe whether it's the U.S., Europe or other locations. What earlier used to be a unipolar world is becoming multipolar now leading to a fair bit of destabilization."

Conflicts Reshaping Global Markets

Geopolitical tensions continue to reshape global supply chains, trade relations and energy markets, leaving businesses vulnerable to new uncertainties. Persisting regional conflicts, including the Russia-Ukraine war and tensions in the Middle East, are directly impacting business strategies, investment decisions and cross-border trade. As a result, 64 per cent of respondents identify international conflicts as the biggest threat to their operations. The risks extend to changing trade policies, tariffs and currency fluctuations, which further complicate the global business environment.

Chandrapal Singh Gour, GM - Head Insurance TATA Projects, said, "Today, the risk dynamics have completely changed. Risks are being defined through geopolitical issues and the geography where companies operate. For instance, there was sudden political turmoil in Bangladesh and Sri Lanka which no one could foresee a year before. Similarly, no one could have predicted that the Ukraine-Russia conflict would persist for such an extended period, impacting the entire world."

The Growing Burden of Compliance

As concerns over environmental sustainability, social responsibility and data privacy continue to rise, regulatory bodies are imposing stricter compliance requirements. Failure to adhere to these regulations could result in financial penalties and reputational damage. This is especially concerning for businesses operating across multiple regions, where regulatory frameworks can vary significantly. 62 per cent of respondents consider data privacy and protection regulations a top emerging risk, underscoring the urgency for businesses to adapt to evolving compliance standards.

Parag Deodhar, MD - Internal Audit, Global IT Audit Lead, Accenture, stated, "As certain nations implement controls and introduce regulatory measures, we gain a clearer understanding of the likelihood of these risks. Artificial intelligence, for instance, when Europe introduced the first AI Act, other nations realized the need for an ethical/responsible framework. Similarly, after one country enforced data privacy laws, others followed."

Supply Chain Risks

The global supply chain, already under pressure from ongoing geopolitical conflicts and trade restrictions, faces increasing risks from natural disasters, pandemics, and cyber-attacks. Industries that rely heavily on international trade are particularly vulnerable, especially in sectors like automotive manufacturing. The report highlights that 83 per cent of automotive and auto-ancillary companies cite logistics and transportation disruptions as their biggest emerging threat amid the ongoing Red Sea Crisis. These disruptions lead not only to higher costs and delays but also legal and reputational risks due to missed delivery deadlines or compromised service standards.

Gaurav Hingne, CRO, Exide Energy Solutions Ltd. said, "Over the last 6 months to 1 year, we have developed multiple partners whether its freight line or logistics partners. We are diversifying and localizing our supply chain to the extent possible so that if there is a global impact and if we are not able to import say material X from a particular country, we have either developed alternate channels and sources or localized that in India."

Adapting to Demographic Shifts

Demographic changes are transforming the global consumer landscape, with significant implications for businesses. In emerging markets, younger generations are driving demand for digital and eco-friendly solutions, while developed economies face the challenges of aging populations and shrinking workforces. Additionally, 51 per cent of respondents are concerned about changing consumer behaviors, which are increasingly shaped by expectations for sustainability and digital convenience. Businesses that fail to keep pace with these shifts risk losing relevance in an evolving marketplace.

Wilfred Menezes, director, Athena Global Logistics Pvt. Ltd., stated, "The advent of AI will affect every industry. So, with time we must build strategies to bridge the gap between us and our customers. Customers will be expecting documents to be automated, price automation or information on his mobile through an application."

In addition to the risks posed by external forces, businesses are grappling with internal financial pressures. Sluggish economic growth, rising input costs and tighter credit conditions are making it harder for organizations to maintain financial viability. For instance, 67 per cent of respondents from the IT sector express concern over financial instability, citing challenges related to payment delays and high borrowing costs. As businesses struggle to manage short-term liabilities and access capital, financial instability is expected to be a top threat over the next five years.

Nitin Nair, group head - Insurance RPG Group, revealed, "The executive rules of DPDP Act are just around the corner. The way to mitigate emerging data privacy & security risks lies in continuous evolution. Businesses cannot stick to one kind of solution as the validity of it may not be more than 6 months. It's a continuous process of evaluating your firewalls; your processes; check for breaches; be vigilant about the data you share and with whom you share it."