Health and safety overtake cyber risks in corporate concerns – Clyde & Co.

86% of directors and officers consider health and safety more important.

This year's top concerns in the risk landscape have seen notable shifts. Health and safety risks have surged to the forefront, with 86% of respondents considering them very or extremely important, compared to an average of 45% in previous years, according to a Clyde & Co. insight.

This elevates health and safety to the top spot, displacing cyber-attacks, which had held the position for three consecutive years. The rise in concern may be attributed to highly publicised fines on major corporations in the UK and increased enforcement by regulatory bodies like the Health and Safety Executive.

Cyber risks remain a close second concern, with evolving threats driven by the integration of artificial intelligence by cyber threat actors. 

This makes attacks more potent and harder to detect, increasing pressure on Directors and Officers (D&Os) to implement robust cybersecurity controls.

A new entry to the top risks list is concerns about systems and controls, reflecting regulatory actions and significant fines imposed for failures in this area. Boards are expected to prioritise internal controls, as highlighted in the revised UK Corporate Governance Code.

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Sanctions risk has also emerged as a new concern, driven by strengthened enforcement measures and the introduction of new legislation. The establishment of the Office of Trade Sanctions Implementation (OTSI) in the UK further underscores the importance of compliance in this area.

Regulatory risk remains a significant concern, particularly in the financial sector, with increased scrutiny from regulators like the Financial Conduct Authority (FCA). 

The FCA's focus on areas such as consumer protection and individual accountability adds to the regulatory burden faced by D&Os.

Despite the global emphasis on Environmental, Social, and Governance (ESG) factors, climate change surprisingly does not feature in the overall top risks list. However, it has gained prominence in certain regions like Asia and the Middle East. Boards need to understand the potential liabilities and repercussions associated with ESG policies.

Effective risk management and robust systems and controls are crucial for mitigating these risks and avoiding potential financial and reputational damage. 

Failure to address these risks adequately could lead to regulatory penalties, shareholder litigation, and reputational harm.