Business Leaders Identify Key Risks for 2024: Economic Downturn, Inflation, and Labor Shortages

As we approach 2024, business leaders around the globe are expressing heightened concerns about a range of risks that could impact their operations and the broader economy. According to the World Economic Forum’s 2024 Executive Opinion Survey (EOS), conducted in partnership with Marsh McLennan and Zurich Insurance Group, the top three risks identified by executives are economic downturn, inflation, and labor shortages. This survey, which gathered over 11,000 responses from executives in 121 economies, sheds light on the complex landscape of challenges that businesses are facing.

The Top Concerns: Economic Downturn and Inflation

The survey results reveal a clear consensus among business leaders regarding the immediate threats to their organizations. Economic downturn ranks as the foremost concern, reflecting fears of a potential recession that could disrupt markets and consumer spending. Coupled with this is the persistent issue of inflation, which has reached record levels in many regions, leading to a widespread cost-of-living crisis. The combination of these two factors creates a precarious environment for businesses, as rising costs and declining consumer confidence can severely impact profitability and growth.

Labor Shortages: A Growing Challenge

Labor shortages have emerged as a significant risk, particularly in the wake of the COVID-19 pandemic, which has reshaped workforce dynamics. Many industries are struggling to find qualified workers, leading to increased competition for talent and rising wages. This shortage not only hampers operational efficiency but also poses a threat to innovation and long-term strategic goals. As businesses strive to adapt to this new reality, the challenge of attracting and retaining skilled employees remains a top priority.

Global Perspectives on Risks

While U.S. business leaders have identified economic downturn, inflation, adverse outcomes of artificial intelligence (AI) technologies, food supply shortages, and extreme weather as their primary concerns, the global perspective is similarly focused. Across all respondents, the top risks include economic downturn, inflation, labor shortages, poverty and inequality, and extreme weather events. This alignment highlights the interconnected nature of these challenges, as economic factors can exacerbate social issues and environmental risks.

Environmental Risks and Extreme Weather

The EOS report emphasizes the growing impact of environmental risks, particularly in light of recent extreme weather events. Severe flooding, wildfires, and elevated temperatures have raised alarms about the stability of water and food supplies. The report notes that extreme weather events were highlighted as the fifth biggest risk by G20 countries, underscoring the urgent need for businesses to consider climate-related factors in their risk assessments. As climate change continues to escalate, the implications for supply chains and operational resilience become increasingly critical.

Technological Risks: Misinformation and AI

While environmental and economic risks dominate the rankings, technological risks are also gaining attention. The survey indicates that misinformation and the adverse outcomes of AI technologies are becoming more prominent concerns, particularly among executives in high-income countries. As businesses increasingly rely on digital platforms and AI-driven solutions, the potential for misinformation to disrupt operations and decision-making processes cannot be overlooked. This evolving landscape necessitates a proactive approach to managing technological risks alongside traditional economic and environmental concerns.

Navigating the Complex Risk Landscape

The findings of the EOS survey highlight the intricate web of risks that businesses must navigate in 2024. Reid Sawyer, head of the emerging risks group at Marsh, notes that the interconnectedness of these risks is particularly alarming. For instance, an economic downturn could lead to increased food scarcity, which in turn may exacerbate social inequalities and unrest. This cascading effect underscores the importance of a holistic approach to risk management, where businesses must consider the interplay between various factors.

The Need for Broader Focus

Peter Giger, group chief risk officer for Zurich Insurance, emphasizes the necessity of broadening the focus beyond purely economic risks. With 2024 projected to be one of the warmest years on record, the impacts of climate change must be integrated into risk strategies. Additionally, while emerging technologies offer solutions to many challenges, they also introduce new threats that require careful consideration. By proactively identifying and mitigating these diverse risks, businesses can enhance their resilience and position themselves for success in an uncertain future.