Stefano Moritsch, Global Geopolitics Lead at KPMG International, said: “To some extent, the COVID pandemic was a rehearsal for some of the broader risks and profound threats facing companies today. Leaders have developed a degree of resilience but, for the first time in modern history, they’re facing challenges on multiple fronts – from conflict to complex regulation, climate change and a ‘patchwork’ adoption of AI in different nations and regions.”

He also highlighted the urgency for Malaysia to navigate the evolving landscape of AI governance, which will ensure the responsible integration of this transformative technology into the nation's economic fabric. On the AI front, while the Malaysian government is developing a governance and ethics code framework, companies must proactively shape their own AI strategies. The rapid advancements in AI mean that any regulatory measures will quickly become outdated, so businesses must stay ahead by taking the initiative in AI integration and governance.

"AI presents a significant opportunity to revolutionize Malaysia’s industries. However, it is equally important to establish clear guidelines that address ethical considerations and mitigate potential risks associated with AI deployment,” said Datuk Johan.

For organizations to effectively navigate the current “polycrisis” environment, KPMG’s report outlines five initial steps CEOs can take today:

1.     Conduct a comprehensive risk assessment
2.     Stay informed and monitor geopolitical developments
3.     Diversify supply chains
4.     Enhance operational resilience
5.     Foster strong stakeholder relationships.

KPMG has also developed a heat map looking at the impact of the top risks on individual key sectors. The analysis reveals the world’s energy and natural resources industry is the most exposed to risks, driven especially by uncertainty in the Middle East and the increasing politicization of access to minerals and crucial resources. The infrastructure industry and financial services are second and third, with both facing threats from AI governance gaps and growing economic headwinds. 

Furthermore, KPMG’s analysis also revealed that the energy and natural resources sector recorded the lowest Financial Performance Index (FPI) score amongst all sectors. KPMG FPI is a measure of financial health based on data from over 40,000 companies globally. A lower score suggests underperformance and potential financial instability within the sector. This underperformance highlights the urgent need for companies within this sector to reassess their strategies, manage risks effectively, and adapt to changing market conditions to improve their financial health.

The full report can be downloaded from www.kpmg.com/toprisksforecast

¹ The High Cost of Global Economic Fragmentation, International Monetary Fund (IMF), August 2023
² Global Peace Index 2023, Institute of Economics and Peace, 2023
³ Artificial Intelligence Index Report 2024, Stanford Institute for Human-Centered AI, April 2024
⁴ Bank Negara Malaysia Quarterly Bulletin Q1 2024

Source: KPMG PLT

FOR MORE INFORMATION, PLEASE CONTACT:
Name: Andrew Leong

Email: kaijianleong@kpmg.com.my