2Q23

Emerging Risks
Report

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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.

Emerging risk list sourced

from client interactions and
secondary research

Quarterly emerging risk

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

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

Source: Gartner

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2Q23 Emerging Risk
Universe Map

Economic Technological Impact

6 5 12 High
7 13
8 Medium
9 14
10 Low
11 15
Time Frame
1
Within 1 year
2 16
1-2 years
2+ years
3 17
Climate &
Political
ESG
4 18
19
20

Talent

# Risk category Risk Name # Risk category Risk Name

1 Climate & ESG Climate Activism 12 Technological Third-Party Viability
2 Climate & ESG ESG Third-party Risk 13 Technological Cloud Concentration Risk
3 Climate & ESG New Extreme Weather Events 14 Technological Mass Generative AI Availability
4 Climate & ESG Water Scarcity 15 Technological Personal Data Regulatory
Fragmentation
5 Economic Bank Crisis-Driven Inflation
16 Political China Trade Tensions
6 Economic Credit Crunch Widens
17 Political Evolving Sociopolitical
7 Economic Financial Planning Uncertainty
Expectations
8 Economic Market Effects From Higher
18 Talent Decline in Employee Proactivity
Borrowing Costs
19 Talent Workforce Planning Uncertainty
9 Economic Overzealous Cost Cutting
20 Talent Working Population Decline
10 Economic Stagflation Expectations
11 Economic Wage-Price Spiral

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

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2Q23 Top Risks

Mass Generative AI Availability

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

Root Causes Potential Consequences

Widespread Recognition of AI’s Potential Strategic Misfire

Disruptiveness Lack of strategic AI vision results in
ChatGPT created a sudden realization wrong use case adoption, lack of AI
among the general public about generative talent, inadequate regulatory compliance,
AI’s potential disruptiveness, leading to and wasted investments.
investment and deployment race.

Step Leaps in Gen AI Capabilities in Control Failure Risk

Short Time Risk
Exposure Malicious actors increase theft, fraud,
Gen AI technology capabilities such as or other attacks with Gen AI tools.
GPT3 and GPT4 increased faster than Mass Unauthorized use of AI may cause data
initially expected; Capabilities gains Generative AI and other intellectual property entering
continue to grow quickly. Availability the public domain.

Cloud Service Providers Accelerate Gen Unreliable Outputs

AI Adoption Factual inaccuracies, hallucinations,
Integration of AI support services and biases, and potential copyright
technologies by cloud service providers infringements in LLM outputs expose
and software creates a platform for organizations to operational failures and/
easier incorporation of more advanced or legal/reputational consequences.
AI technologies.

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

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2Q23 Top Risks

Financial Planning Uncertainty

Impact Score: 2.71 / Time Frame: 1.73 / Frequency Selected: 62%

Root Causes Potential Consequences

Interest Rate Uncertainty Rapidly Outdated Cash-Flow Forecasts

Central banks continue to signal hawkish Cash flow may change rapidly with
positions on inflation despite recent fast-moving markets, creating
pauses in interest rate increases. differences between forecasted and
actual cash positions.

Cost Increases Overzealous Cost Cutting

Risk
Cost increases, while generally elevated, Exposure Organizations make cuts that harm
are uneven across the supply chain with strategy execution or otherwise
some areas such as energy, chips, still Financial overcorrect in response to economic
experiencing cost and corresponding Planning indicators, harming future growth.
supply challenges. Uncertainty

Recessionary Concerns Delayed Transformations

Concerns over demand growth and Cash flow and demand concerns
uncertainty around recession cause cause companies to put off necessary
investors to reevaluate financial exposure transformation or seek incremental
and risks. changes that fall below investments
needed for future growth.

Risk Description: The risk of financial planning being ineffective due to a high degree of macroeconomic uncertainty.

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

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2Q23 Top Risks

Cloud Concentration Risk

Impact Score: 2.90 / Time Frame: 2.23 / Frequency Selected: 62%

Root Causes Potential Consequences

Efficiencies from Cloud Concentration Susceptibility to Targeted Regulatory

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

Risk
A handful of “hyperscale” providers that Exposure Concentrating a large number of
dominate global and regional cloud enterprise services on a single provider
service markets have a high degree of Financial exposes organizations to widespread
leverage over their customers due to Planning disruptions to business and/or customer-
their market positions. Uncertainty facing operations.

Divergent Regulatory Regimes Vendor Lock-In

Regulations at the country level and at Reduced negotiation power with vendors
the subnational level diverge on anti- or future unfavorable pricing or terms and
competition, data sovereignty and conditions; Switching vendors later may
privacy rules pertaining to cloud services. 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

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2Q23 Risk Dashboards

Regional Emerging Risks

Top 5 Emerging Risks
By Risk Score1

Canada United Kingdom Asia/Pacific (excl. Australia and NZ)

1. Third-Party Viability 1. Credit Crunch Widens 1. Personal Data Regulatory
2. New Extreme Weather Events Fragmentation
2. ESG Third-party Risk
2. Financial Planning Uncertainty
3. Market Effects from Higher
3. Overzealous Cost Cutting 3. Third-Party Viability
Borrowing Costs
4. Mass Generative AI Availability 4. Stagflation Expectations

5. Financial Planning Uncertainty 5. Workforce Planning Uncertainty

United States Europe (excl. U.K.) Australia and New Zealand

1. Third-Party Viability 1. China Trade Tensions 1. Third-Party Viability

2. Mass Generative AI Availability 2. Bank Crisis-Driven Inflation 2. Workforce Planning Uncertainty

3. Financial Planning Uncertainty
4. Cloud Concentration Risk
5. Bank Crisis-Driven Inflation
3. Financial Planning Uncertainty
4. Third-Party Viability
5. Stagflation Expectations
3. New Extreme Weather Events
4. Mass Generative AI Availability
5. Personal Data Regulatory
Fragmentation

n = 17 (Canada); 151 (United States); 20 (United Kingdom); 25 (Europe, excl. U.K.); 9 (Asia/Pacific, excl.
Australia and New Zealand); 19 (Australia and New Zealand)
Note: Only three Asia Pacific risks are presented due to n size.
Source: 2Q23 Gartner Emerging Risks Survey
1
Risk Score: Risk Score = Cube Root (Impact x Inverse Time Frame x Frequency Selected as a Top 10
Emerging Risk Rescaled)

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Emerging Risk Misalignment and Blind Spots
Emerging Risks by Level of Attention and Risk Score

Top 5 Risk Other Risk

Potential Overinvestment Prioritized Risks

Stagflation Expectations Financial Planning Uncertainty

New Extreme Weather Events Cloud Concentration Risk
Credit Crunch Widens China Trade Tensions
Climate Activism Bank Crisis Driven Inflation
Market Effects from Higher
Borrowing Costs
Level of Attention (Avg.)

Personal Data Regulatory

Fragmentation

Deprioritized Risks Potential Blind Spots

Overzealous Cost Cutting Third Party Viability

Decline in Employee Productivity Mass Generative AI Availability
Wage-Price Spiral Workforce Planning Uncertainty
ESG Third-Party Risk Evolving Socio-Political Expectations
Working Population Decline
Water Scarcity

Risk Score (Avg.)

Source: 2Q23 Gartner Emerging Risks Survey

n = 249; quadrant alignment based on median scores (exact median scores rounded down)

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