As we navigate through 2025, UK businesses face unprecedented challenges requiring strategic foresight and adaptability. This horizon scanning analysis examines five critical external risk factors that organisations must monitor and prepare for, providing actionable insights for business leaders balancing immediate operations with future planning.
Understanding Tomorrow's Challenges
Learning to deal with disruption has become an essential part of personal and professional life. While we cannot predict the future with certainty, organisations that understand their risks can embrace opportunities, potentially outperforming their competition.
For small business leaders wearing multiple hats, balancing day-to-day issues with future planning can be particularly challenging. Our risk management and compliance specialists provide impartial business advice based on early warning signals. Here, Helen Barge, our Managing Director, shares her top five external risk factors organisations should have on their radar.
1. Supply Chain Reliability: Time's Up for Risky Business
All organisations rely on suppliers and partners to meet and exceed customer expectations. From manufacturing and accountants to IT and customer service, collaboration is key. However, attention needs to be paid to the privacy and cyber security of products and services.
The recent CrowdStrike incident demonstrated this vulnerability, causing one of the largest IT outages in history and affecting Microsoft and millions of Windows systems worldwide. Airlines resorted to manual flight scheduling, coffee shops couldn’t process card payments, and countless businesses faced operational disruptions. While this incident made headlines, daily smaller incidents can be equally devastating to organisations.
Due diligence of your suppliers is key. Consider what steps they are taking to ensure service delivery during incidents, and how frequently you are undertaking assessments – this should be at least annually for critical suppliers.
New legislation has recently been introduced in Europe. The NIS2 and DORA require in-scope organisations to assess and manage cybersecurity and business continuity within their supply chains. Similar legislation is expected in the UK in the near future.
Further Resources:
Explore our Supply Chain: A Comprehensive Guide and discover opportunities in Exposed Vulnerabilities: Building Resilient Supply Chains. Helen took to the stage at the recent Global Cyber Summit presentation on supply chain threats and discussed critical components of the supply chain and the threats from cyber disruption. And, for some bedtime viewing, check out our “Cracking the Code: NIS2 and DORA Legislation Made Simple” webinar.
2. Economics: The Age of Adaptation
‘Change is the only constant’, and whilst business leaders dislike uncertainty, we’re entering a period of significant change. Government-introduced changes will have major impacts on businesses. Shifting factors such as tax rates, regulations, funding access, and net zero policies all influence business activity to varying degrees.
In January, the Office for National Statistics1 reported that 62% of trading businesses were experiencing at least one challenge impacting their turnover – with economic uncertainty being the most reported challenge at 28%. In February, the Federation of Small Business2 reported that business confidence in the last quarter has dipped to a post-Covid low.
For some organisations, this may mean contraction; for others, it presents opportunities for:
- Investment in automation
- Streamlining inefficient processes
- Seeking new markets
- Diversifying product sets
Organisational growth depends on taking risks and adapting to changing circumstances. That’s why it’s imperative that organisations understand their current risk appetite – after all, there’s a huge difference between a gamble and an informed decision.
Further Resources:
Join our IIRSM-partnered risk management courses to enhance your decision-making capabilities. These can be found by filtering the Upcoming Events on our News and Events page.
3. Global Politics: A Week is a Long Time
With Donald Trump’s election as the 47th American President, Justin Trudeau’s stepping down, and widespread political changes across Europe, we are entering uncharted territory. Despite Brexit, new European legislation covering AI, financial services, and technical services will impact UK business.
The Worker Protection Act 2024, effective since October 2024, requires employers to take proactive steps against workplace sexual harassment. Additionally, King Charles III’s recent speech outlined the government’s intention to regulate AI development.
Further Resources:
Business resilience comes from detecting and understanding risks and putting effective procedures in place to help navigate it. Understanding where an organisation sits in the supply chain is key to recognising both threats and opportunities.
4. Environment: Too Hot to Handle?
Extreme weather events have become increasingly frequent and severe. Our world now faces unprecedented challenges, from devastating storms and floods to prolonged droughts and destructive wildfires.
Each natural or human-made disaster creates ripple effects through supply chains. And it’s a domino effect, creating uncertainty for businesses across the supply chains.
Organisations need to be adaptable and robust risk management strategies to navigate these challenges.
A rising number of organisations are engaging with environmental, social and governance (ESG) policies to be more sustainable and mitigate risk.
Risk Evolves has achieved a platinum EcoVadis sustainability rating, placing us in the top 1% globally. Our ISO and BCorp certifications demonstrate our commitment to environmental responsibility, and serves as an assurance for our clients, who rely on us to safeguard their compliance and support them as they navigate complex regulations and mitigate risks effectively.
Further Resources:
Discover how effective environmental strategies can help differentiate your organisation and give you the edge in a competitive marketplace.
5. Social: Beyond the Paycheque
There is an increasing risk to businesses who are not engaged with the needs of their customers and workforce.
Recent research by Opinium, shows that 32% of UK workers would leave their job if their employer’s ESG values did not align with their own. For workers aged 18-34, this number rose to 43%.
Today’s workforce has evolving expectations. To successfully attract and retain talent, businesses must prioritise:
- Strong social responsibility initiatives
- Flexible working arrangements
- Meaningful work-life balance
Organisations that fail to adapt to these changing demands risk losing their competitive edge in the talent market.
Further Resources:
Read more about this in our article on the broad benefits of ESG which explains how effective ESG strategies can give you the edge in a competitive market.
Keep up to speed on this flurry of risk-related activity and its implications
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