Gartner 2Q23 Emerging Risks Report

Emerging Risks Report 2Q23

How We Create This Report

• Emerging risks are those whose effects have not yet been substantially realized in the enterprise.

• Their evolution is highly uncertain because it is rapid, nonlinear or both.

• Our Quarterly Emerging Risk Report captures senior executives’ and risk managers’ views on emerging risks and provides insight on identifying and mitigating them.

Quarterly emerging risk research with peer-sourced insights and industry analysis

Emerging risk list sourced from client interactions and secondary research

Source: Gartner

Risks that respondents indicate have emerged, have low perceived impact, low time-to-impact, low relevance to their enterprises, or for which their enterprises are highly prepared are removed

Quarterly emerging risk survey

2Q23 Emerging Risk Universe Map

2Q23 Top Risks

Mass Generative AI Availability

Impact Score: 2.92 / Time Frame: 2.20 / Frequency Selected: 66%

Root Causes

Widespread Recognition of AI’s Potential Disruptiveness

ChatGPT created a sudden realization among the general public about generative AI’s potential disruptiveness, leading to investment and deployment race.

Step Leaps in Gen AI Capabilities in Short Time

Gen AI technology capabilities such as GPT3 and GPT4 increased faster than initially expected; Capabilities gains continue to grow quickly.

Cloud Service Providers Accelerate Gen AI Adoption

Integration of AI support services and technologies by cloud service providers and software creates a platform for easier incorporation of more advanced AI technologies.

Risk Exposure

Mass Generative AI Availability

Potential Consequences

Strategic Misfire

Lack of strategic AI vision results in wrong use case adoption, lack of AI talent, inadequate regulatory compliance, and wasted investments.

Control Failure Risk

Malicious actors increase theft, fraud, or other attacks with Gen AI tools. Unauthorized use of AI may cause data and other intellectual property entering the public domain.

Unreliable Outputs

Factual inaccuracies, hallucinations, biases, and potential copyright infringements in LLM outputs expose organizations to operational failures and/ or legal/reputational consequences.

Risk Description: The risk that massively available, generative AI rapidly surpasses organizational ability to understand associated risks and opportunities.

Source: 2Q23 Gartner Emerging Risks Survey, n = 249

2Q23 Top Risks

Financial Planning Uncertainty

Root Causes

Interest Rate Uncertainty

Central banks continue to signal hawkish positions on inflation despite recent pauses in interest rate increases.

Potential Consequences

Rapidly Outdated Cash-Flow Forecasts

Cash flow may change rapidly with fast-moving markets, creating differences between forecasted and actual cash positions.

Cost Increases

Cost increases, while generally elevated, are uneven across the supply chain with some areas such as energy, chips, still experiencing cost and corresponding supply challenges.

Overzealous Cost Cutting

Organizations make cuts that harm strategy execution or otherwise overcorrect in response to economic indicators, harming future growth.

Recessionary Concerns

Concerns over demand growth and uncertainty around recession cause investors to reevaluate financial exposure and risks.

Source: 2Q23 Gartner Emerging Risks Survey, n = 249

Delayed Transformations

Cash flow and demand concerns cause companies to put off necessary transformation or seek incremental changes that fall below investments needed for future growth.

2Q23 Top Risks

Cloud Concentration Risk

Impact Score: 2.90 / Time Frame: 2.23 / Frequency

Root Causes

Efficiencies from Cloud Concentration

IT and business units often concentrate cloud services to reduce complexity, gain efficiencies, and attain capabilities by using hyperscale cloud vendors.

Potential Consequences

Susceptibility to Targeted Regulatory Changes

Changes in national and state regulations remove access to whole or parts cloud functionality, increasing friction, complexity, and costs for the organization.

Limited Choice of Vendors

A handful of “hyperscale” providers that dominate global and regional cloud service markets have a high degree of leverage over their customers due to their market positions.

Single Point of Failure

Concentrating a large number of enterprise services on a single provider exposes organizations to widespread disruptions to business and/or customerfacing operations.

Divergent Regulatory Regimes

Regulations at the country level and at the subnational level diverge on anticompetition, data sovereignty and privacy rules pertaining to cloud services.

Vendor Lock-In

Reduced negotiation power with vendors or future unfavorable pricing or terms and conditions; Switching vendors later may carry high technical and contract costs.

Risk Description: The risk associated with dependence on a particular cloud provider for multiple business capabilities, such that a single failure can result in a disruption to multiple aspects of the business.

Source: 2Q23 Gartner Emerging Risks Survey, n = 249

2Q23 Risk Dashboards

Emerging Risk Misalignment and Blind Spots

Emerging Risks by Level of Attention and Risk Score

Stagflation Expectations

New Extreme Weather Events

Credit Crunch Widens

Climate Activism

Financial Planning Uncertainty

Cloud Concentration Risk

China Trade Tensions

Bank Crisis Driven Inflation

Market Effects from Higher Borrowing Costs

Personal Data Regulatory Fragmentation

Overzealous Cost Cutting

Decline in Employee Productivity

Wage-Price Spiral

ESG Third-Party Risk

Working Population Decline

Water Scarcity

Third Party Viability

Mass Generative AI Availability

Workforce Planning Uncertainty

Evolving Socio-Political Expectations

Source: 2Q23 Gartner Emerging Risks Survey n = 249; quadrant alignment based on median scores (exact median scores rounded down)

Risk Score (Avg.)

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