Risk Trends to Follow in 2025
By Anne Ploetner
ClearRisk
In 2024, we identified key risk trends such as cybersecurity, artificial intelligence (AI), environmental, social, and corporate governance (ESG), market capacity, and evolving approaches to risk management. These challenges grew increasingly interconnected, becoming critical to organizational success.
As we enter 2025, the risk landscape continues to shift at a rapid pace, driven by technological advancements, changing workforce dynamics, environmental challenges, and growing regulatory pressures. Organizations that take proactive steps to address emerging risks in cybersecurity, AI, employee retention, risk technology, and environmental impact will position themselves for success in an increasingly complex world.
This blog highlights the top 5 trends shaping risk management strategies in 2025:
- Cybersecurity
- AI Operations
- Employee Retention
- Risk Technology
- Environmental Impact
Cyber Security
If you remember our 2024 Risk Trends blog, cybersecurity was a leading risk trend—and it remains a top priority in 2025. The Internal Audit Foundation of North America ranked it as the top risk trend last year, this year, and anticipates it will continue to hold that position in the upcoming years (Internal Audit Foundation).
The cybersecurity landscape continues to evolve as cyberattacks become more sophisticated and pervasive. Interconnected systems and expanding digital networks create new vulnerabilities, heightening risks for organizations. Cyber resilience is now essential. Public sector systems, which store sensitive data such as financial records and public safety information, are prime targets for cybercriminals. This ongoing threat underscores the critical need for robust cybersecurity measures (MNP).
Organizations are shifting from reactive to proactive cybersecurity strategies, leveraging advanced tools to detect and neutralize threats in real time. To stay ahead of potential risks, public sector risk professionals should prioritize:
- Regular cybersecurity audits and vulnerability assessments.
- Investment in advanced threat detection tools.
- Training staff to recognize phishing and other social engineering attacks.
- Adopting data security solutions, software, and/or tools that are easy to use, scalable, and can integrate well with your existing systems. (Salesforce).
Ransomware attacks on public entities are increasing, further emphasizing the importance of robust incident response planning, as highlighted by the Public Risk Management Association (Public Risk Magazine).
Cloud-based solutions are also proving to be a game-changer in cybersecurity. These platforms provide continuous monitoring, encryption, and automated updates to address emerging threats, reducing the burden on internal IT teams. With dedicated security teams and advanced tools, cloud providers ensure compliance with industry standards while enhancing data protection, mitigating risks, and supporting business continuity. By centralizing and scaling security efforts, cloud-based solutions empower organizations to safeguard their systems in an increasingly complex threat environment.
AI Operations
Artificial intelligence is transforming operational efficiency while introducing new challenges. In the public sector, AI has the potential to revolutionize risk management by automating administrative tasks, enhancing emergency response systems with predictive analytics, and leveraging real-time monitoring to identify and address issues proactively. Machine learning algorithms can forecast risks, bolster regulatory compliance, and prevent threats before they escalate. However, this reliance on AI demands robust oversight to address risks such as bias in decision-making, data privacy concerns, and potential misuse (EY, Forbes).
To effectively manage these AI-related risks, EY recommends the following strategies:
- Ensuring transparency and accountability in AI systems.
- Regularly auditing AI tools to identify and mitigate biases.
- Collaborating with IT and legal teams to develop ethical AI policies.
By balancing innovation with responsible implementation, public sector organizations can harness the power of AI while minimizing its associated risks.
Employee Retention
Employee retention remains a critical concern for organizations as modern workers increasingly prioritize flexibility, inclusion, and opportunities for growth. To reduce turnover, organizations are focusing on transparent communication, cultivating strong workplace cultures, and offering robust career development programs. According to Forbes, investing in employee well-being and professional development is essential for building a resilient workforce. Strategies to address burnout and foster meaningful engagement are key to retaining top talent (Forbes, Public Risk Magazine).
High employee turnover continues to challenge public sector organizations, particularly in essential areas like public safety, healthcare, and infrastructure. Turnover not only disrupts services but also drives up training costs and erodes institutional knowledge.
To tackle these challenges, Forbes recommends the following strategies for public sector organizations:
- Foster a positive workplace culture with clear paths for career advancement.
- Provide competitive salaries and benefits.
- Emphasize flexibility, such as hybrid work models where applicable.
- Implement tools that enhance efficiency through task automation.
On the final point, equipping employees with technology that simplifies and empowers their work creates a more positive and engaging workplace experience. This, in turn, strengthens organizational loyalty, boosts employee engagement, and enhances productivity, ensuring long-term success (Deloitte).
Risk Technology
The adoption of advanced risk technologies has become essential for effective risk management. Technological advancements are enabling public sector organizations to better predict, assess, and respond to risks, significantly enhancing their resilience. Tools such as advanced data analytics and real-time monitoring systems provide powerful capabilities to address evolving challenges.
These technologies equip risk professionals with actionable insights, enabling them to make informed decisions and adapt swiftly to emerging threats (Global Risk Community).
Popular risk technologies among public sector organizations include:
- Cloud-based platforms for centralized risk management, like ClearRisk.
- Geographic Information Systems (GIS) for mapping climate risks.
- Predictive modeling tools to anticipate emerging threats.
By integrating these tools into their operations, organizations can strengthen their ability to manage risks effectively and build long-term resilience.
Environmental Impact
The growing frequency of extreme weather events, rising sea levels, and other climate-related challenges has elevated environmental risks as a critical concern for public sector organizations. These risks pose significant threats to infrastructure, disrupt communities, and place heavy demands on resources (Internal Audit Foundation). Notably, 2024 was a record-setting year for precipitation at Toronto Pearson International Airport, with Environment Canada reporting significant rainfall levels that underscored the growing impact of climate change on urban areas. Such events highlight the need for robust adaptation measures to protect critical infrastructure and reduce vulnerabilities to future disruptions (Insurance Institute).
To address climate risks, public sector risk professionals should:
- Develop comprehensive climate adaptation and mitigation plans.
- Strengthen infrastructure to withstand extreme weather.
- Collaborate with stakeholders to promote sustainable practices.
The convergence of climate change and urban development requires innovative solutions and proactive planning to ensure long-term resilience. (Public Risk Magazine).
Conclusion
In 2025, effective risk management will depend on adaptability and innovation. Prioritizing cybersecurity resilience, leveraging AI responsibly, enhancing employee engagement, utilizing advanced risk technologies, and proactively addressing climate-related risks will be crucial for overcoming future challenges. Public sector risk professionals who take bold action in these areas will not only mitigate risks but also uncover opportunities for growth and transformation.