forecasting 2025

Planning ahead

• Stress-testing supply chains to minimize possible upsets.
• Reviewing quality controls in manufacturing to prevent quality issues that could cause product liability, recalls and reputational damage.
• Conducting table-top tests of business continuity and IT disaster recovery plans to keep plans fresh, relevant, and actionable when needed.
• Reviewing how company risks are identified and discussed at executive levels, with an eye toward improving risk awareness as company strategy is updated.

The success or failure of businesses in 2025 will depend on how well and quickly they can adapt to navigating the unexpected in this changing global landscape.

The COVID-19 pandemic spurred major changes to the global supply chain. As factories shuttered across China, and the cost of materials, goods and overall shipping skyrocketed, businesses were forced to adapt and find solutions to keep costs reasonable.

Since then, the global supply chain continues to see substantial changes, from the war in the Middle East impacting shipping through the Red Sea and Suez Canal and the war in Ukraine to port strikes in the U.S. and more. Meanwhile, president-elect Donald Trump has vowed to impose tariffs on goods produced outside of the U.S. to try and spur a manufacturing boom throughout the country. This, in turn, will likely cause a trickle-down effect where businesses pass the cost onto consumers to recoup lost revenue. Finally, the introduction of AI and emerging technology into the supply chain has the potential to drive new efficiencies, while introducing new and complicated risks that companies must be prepared to navigate.

Bringing production closer to home in countries like Mexico and Canada, which are part of a free trade agreement with the U.S., can help mitigate some costs brought on by impending tariffs. We can expect company leaders around the U.S. to focus their efforts in these countries for that reason. Implementing technology to create efficiencies and lower operation costs are other ways to minimize expenses created by the tariffs.

Over the years, cyberattacks have increased in both frequency and sophistication and are among the biggest threats to business today.

Advancing technologies like AI and machine learning will continue to play an important role in mitigating cyberattacks by learning to detect and respond to threats in real time. Responsible governance over these investments will require firms to develop policies, compliance frameworks, and other practices that help ensure proper oversight of these projects. In addition, investment in employee training will become just as important. Businesses should continue to increase their spending on training and educating employees around emerging cyber threats that come from both internal and external sources.

Developing rapid response teams to communicate with regulators, stakeholders, customers, and internal employees will be critical for business continuity in 2025. Businesses should invest in building out a proactive crisis communications plan to immediately begin remediating the situation with honesty and transparency, which in turn will help maintain consumer confidence, protect the brand’s reputation, and control the narrative.

2024 saw one of the biggest business interruptions in decades with the CrowdStrike outage. Businesses around the world had systems go down after a defective software update caused Windows to malfunction and ultimately crash. By some estimates, it cost the cyber insurance market $1.5 billion.

The attack wasn’t malicious, but that didn’t make it any less worrisome. One key to business continuity in 2025 is going to be vendor diversification within IT infrastructure. Companies in 2025 will prioritize diversification to mitigate risk in the event of another outage and should know what is included in their business interruption, property, and cyber insurance policies to understand their coverage and where coverage may be needed.

Another significant cause of business interruption in 2025 will be civil unrest. Large numbers of people around the world are unhappy with the increased cost of living and inflation, lack of access to affordable healthcare, political/religious issues, and more. In some cases, this results in public protests, riots, labor activity such as strikes, and even increased absenteeism. These events disrupt normal business operations, especially when not scheduled or announced ahead of time. Businesses must be prepared to handle interruptions by ensuring their business continuity plan is continuously updated, communications plans are in place and insurance policies are updated in case of property damage.