4 Virtual Brochure – March 2025 This briefing provides: • a summary of the most significant current and future business risks as rated by CAEs working across a broad range of sectors, including financial services, technology, healthcare, consumer and retail, and leisure and hospitality (section 1) • our commentary on the highest ranked risk areas and areas of increasing risk in a UK HE context, with questions for senior leaders and audit committees (section 2); and • a comparative analysis of internal audit effort relative to the top risk areas and commentary on changing internal audit practice (section 3). Overall, this year’s analysis outlines a risk assessment that appears relatively consistent with the previous year. This follows a period of rapid and substantive changes in strategic risk priorities as a consequence of changes in working practices following the pandemic, rising inflation and energy costs, and increasing global instability. Notably, in comparison with the UK HE sector, overall financial liquidity and insolvency risks are reported to be stable. Against this backdrop, one escalating risk stands out - AI and digital disruption. This is reported to be the fastest rising risk area, becoming the third most significant strategic risk for businesses. The pervasive impact of AI also means that its identified as key driver of risks in other areas, particularly in relation to cybersecurity and human capital. More broadly the operating environment for businesses continues to be volatile, characterised by high levels of geopolitical, financial, digital, and environmental uncertainties. The ECIIA observes that having an integrated approach to “strategy, risk management and skills” will likely differentiate successful organisations from competitors, enabling them to respond rapidly and decisively to threats and opportunities. It also cautions that in too many businesses, risk management still appears peripheral to strategic decision-making rather than at its centre.
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