As we head into 2022 organisations and compliance leaders may still be reeling from all the drama and uncertainty of the previous years! Nevertheless, whilst the global pandemic continues to disrupt the corporate world, as professionals we must set our eyes to the future and identify emerging risks.

Anticipating the future is not easily done, but by studying and understanding key risk trends we can prepare. In this article we will be providing insights on 4 risk and compliance hot spots, helping you to lead discussions with your teams in the new year, so you can identify actions needed to establish strategic plans for 2022.

Risk and Compliance Hot Spots 2022

  1. Climate Change

A Risk in Focus Report from September 2021 emphasises how climate change is now a principal risk of the future. The study, which sampled 700 Chief Audit Executives (CAEs) revealed that climate change and environmental sustainability was the rising risk, gaining prominence over other risk types.

The strong message from COP26, in November, stating that “financial institutions must play their part” indicates further that this is indeed a hot spot and one that risk management professionals should pay attention to.

Organisations should act now to defend against future disruption. Teams should consider:

  • How to plan for climate-related risks that may jeopardise your organisations future. E.g., disrupted supply chains.
  • Investing in projects that will future-proof products and services.
  • Ways to set, measure and monitor ESG commitments and avoid climate-related litigation
  • How to reduce emissions and unsustainable practices to safeguard your organisation’s reputation.

  1. Social Expectations

Following on nicely from climate change and linking in with ESG (Environment Social and Corporate Governance) is this next hot spot. The broader social and governance issues that are emerging and will also be under future scrutiny.

There are evolving social expectations for companies to be corporate citizens, and a challenge of 2022 will be how organisations meet these expectations? Stakeholders expect progress on issues such as diversity, inclusion, labour standards and information privacy. And disclosure of human rights and diversity are increasingly becoming law.

Legal and compliance professionals need to maintain governance standards and a strong culture is inherent to good governance. Things to discuss in the new year should be:

  • Building a human-centric culture in a hybrid world.
  • Balancing employee and employer relationships in a hybrid work environment, or over potentially conflicting issues such as vaccination policy.
  • Ensuring due diligence and third-party risk management to avoid reputational risks associated with e.g., human rights abuses and modern slavery.
  • Ensuring meticulous supply chain oversight with investment to enhance supply chain visibility and risk mitigation capabilities.
  • Find ways to work across an enterprise and not in silos to make sure you are evaluating and tracking what you need to be.

  1. Geopolitics

The geopolitical competition will be another driver behind top risks your systems may have to manage in 2022. Changing power dynamics and pandemic driven volatility has increased geopolitical tensions. All this will affect regulations and risk management relating to technology, data, intellectual property, and supply chains.

Businesses may need to consider both low and extreme impact risks. Organisations would do well to:

  • Identifying possible geopolitical risks, assessing the likely impact of those risks and making recommendations to manage, mitigate and respond to them.
  • Focus on corporate resilience and discover ways your business can quickly adapt and differentiate itself in times of disruption. Read our white paper on 5 Ways To Build Resiliency In Disruptive Times

  1. Cyber Crime

Cybersecurity will continue to be a top risk in 2022 according to this year’s Risk in Focus Report. The increasing trend for collaboration between cybercriminals and national states also means that this hot spot is interconnected with the geopolitical situation mentioned above.

Recent incidents such as the those affecting Irish healthcare system have spurred government action but the proliferation of attacks continues and is set to continue. If critical customer or trade information is exposed as a result of a cyber-attack then your organisation could suffer legal action, reputational damage, and loss of trust.

Businesses in 2022 should prepare for restrictions that could impact digital operations such as security and privacy protocols and data compliance.

The Future Is Yours

Here we have touched on key topics that are likely to come across your compliance desk in the next year. You can use these themes to guide a forward-thinking, collaborative discussion with your team in January. By considering geopolitical factors, ESG commitments and due diligence your team will be one step ahead. Talk to 1RS today about supportive digitised compliance programmes that can adequately handle the pace of technological change in the transitionary times ahead.