Even by the standards of an already volatile environment, volatility only appears to be increasing.

We may have weathered pandemic-related supply chain disruptions and rapid changes in consumer demand, but now we face geopolitical instability, energy shortages and associated price increases, global inflation, an evolving and complex regulatory environment, and aggressive changes in central bank monetary policies. The talent shortage and changing workforce attitudes that have become so apparent during the pandemic show no signs of abating. Adding to the complexity of this environment, governments are shifting their focus to protect their own national interests and moving away from the traditional path of globalization.

We see variations on these themes in the US, UK, Western Europe, Asia and elsewhere. In essence, we are facing a whole new set of risks and challenges.

This brings the risk function to the point. Risk owners need to quickly determine what these new risks mean to business strategy and operations. You have to recognize which investments make sense at the moment.

There is a temptation for risk managers and organizations to scale back and slow down during difficult, volatile times, but this cannot be at the core of the strategy. Standing still is not an option in business; On the contrary, standing still means losing ground in competition.

We currently see three key requirements for risk management leaders.

First, protect the critical components of the business. This means investments to strengthen risk and compliance infrastructure across cloud, AI, analytics, automation and security. As our 2022 Compliance Risk Study found, an increasingly complex global regulatory and enforcement agenda makes it imperative for organizations to behave correctly and take the right actions. Compliance also supports operational and environmental resilience.

Second, focus on cost and efficiency. Now is the time to automate mundane and/or repetitive processes, accelerate transformative initiatives, and explore new ways of doing business. Managed services, for example, offer attractive opportunities to increase productivity and reduce costs. By improving technology and data capabilities, functions from compliance to cybersecurity can become more focused and effective in their efforts.

Third, recognize the importance of talent. Risk management leaders should explore non-traditional talent pools such as data scientists and visualization specialists to onboard new modeling and analytical skills. They should also strengthen cross-cutting training and internal development initiatives to expand career paths and continue the process of making risk management an established business discipline.

communication counts. In this complex and rapidly changing environment, it is critical to increase interactions between business leaders and risk managers and create deeper connections with other parts of the organization – while maintaining independence to challenge business assumptions and practices.

The risk function not only has to keep pace with technological changes inside and outside the organization, but also with strategic and financial risks. Risk leadership can also demonstrate its value to the organization by thinking about what lies beyond the horizon, alongside current and emerging risks.

The current focus in this challenging environment should be to protect the business while investing in the future. Risk functions must continually improve their ability to collect and use data to make better decisions, make the risk function more efficient, and enable informed investments that support business outcomes. Forward-thinking companies can emerge stronger when volatility subsides.