Five global risks New Zealand directors should be watching

Leaders in the Pacific need to challenge traditional thinking and embed risk in strategic planning as the global operating environment becomes more complex, according to Navigating Global Risks in 2025, a report by Marsh McLennan.

The report applies the company’s global expertise to the problems facing New Zealand and Australian organisations in five key areas identified by the World Economic Forum.

1. Geopolitical and economic risks

As conflicts in Eastern Europe and the Middle East persist, the report highlights the impacts on trade as a key consideration. Alongside tensions between the US and China – and tariff-based trade wars – this creates uncertainty around supply chain costs and disruptions.

Leaders should shift from a traditional qualitative perspective on risk to a more robust quantitative approach. To adequately prepare for the risks ahead, business leaders may need to challenge the risk management status quo.

For boards, that may require strengthening their foreign affairs capability.

2.      Technology

An increase in cyberattacks, largely because of the rise of generative AI, poses significant threats to businesses in New Zealand and Australia. The report says leaders should consider cybersecurity as a whole-of-business risk, not solely a technology risk.

Its key recommendation for boards is to ensure they, and their executive teams – consider technology risk through a strategic lens. Avoid leaving cyber risk assessments and strategies up to your cyber teams; engage with the wider business.

Undertaking scenario analysis and developing digital literacy across organisations are also recommended.

3.      Employee and business resilience

Noting economic fluctuations, natural catastrophes and public health crises, the report highlights significant risks to employee wellbeing and business resilience.

As people are critical to business resilience, wellbeing must become a top priority for human resources leaders.

Leaders should strengthen their crisis planning and business continuity infrastructure. In addition, determining a target state for employee wellbeing – and determining their current state – can help in the development of a strategic roadmap. From there, organisations may gain a better idea of what type of people they need to deliver it.

4.      Super-ageing societies

In New Zealand, 26% of the population will be over 65 in 2060. Countries are considered ‘super-ageing’ when 20% of their population is over 65 years old.

The report notes that an ageing society has ripple effects on the workforce. For example, it may produce labour shortages in the aged care sector. There will also be impacts on our pension and superannuation systems, and in the workplace where there are likely to be more older people seeking to work past retirement age.

The report offers two ideas for leaders to consider: implement strategies for retaining ageing workers by empowering them to work beyond retirement age; and promote intergenerational collaboration.

5.      Climate

The report notes that extreme and expensive weather events are impacting New Zealand, Australia and the Pacific islands. This means investing in climate resilience is needed now more than ever. But data suggests around two in five companies see climate adaptation as a cost rather than an investment.

Leaders should undertake a ‘holistic assessment’ of how their organisation has been, and could be, impacted by losses from extreme weather events. Armed with that knowledge, they can make informed investment decisions on climate adaptation.