Some economic risks can trigger further issues, creating a domino effect. File photo. Photo: Matt Cavanagh / CC BY-NC-SA 2.0
The economic slowdown, cyber-security and environmental issues are amongst the top risks facing businesses this year, according to a new report.
The New Zealand Risk Landscape Report by accounting firm BDO also warns of cascading risks, where one risk factor can trigger another, creating a domino effect.
BDO risk advisory national leader Tarunesh Singh said businesses not only needed to consider the risk factor that was front of mind - like the economic slowdown - but what could happen as a result of the decisions made to mitigate that risk.
"If you think about an economic slowdown, that puts significant financial strain on most organisations. That could then in itself trigger a need for - for example - a slimming down of the workforce," Singh said.
"Workforce cuts ... (are) a solution to the economic risk. However, it then in itself brings on another number of risks."
BDO said to address risks from an economic slowdown and a slow recovery, businesses should review strategies to be in line with present and forecast economic conditions.
When it came to cyber-security, the report highlighted the rise of artificial intelligence as an example of why businesses should be aware of ways disruptive technologies could amplify online risks.
On the climate and environment, BDO said as scientific modelling indicated extreme weather events would become more frequent and severe in the future, businesses should be developing mitigation plans and identify risks to their business.
Singh acknowledged that "it was a difficult problem" to ensure mitigating the risks were financially sustainable.
"Unfortunately, I don't think there's one solution that's going to fit for everyone here," he said.
"It's about identifying [what material risk factors are] facing your organisation today and then taking a stance based on your own risk appetite, of where you are happy to sit in respect of each of those risks and then taking proportional responses."
The report recommended businesses proactively prepare for a cyber breach or fraud event.