SUMMARY
AXA’s Future Risk Report, now in its 11th edition, analyzes global risks through the perspectives of over 3,000 experts from 50 countries. In total, 10 top risks were ranked and discussed in the document according to the opinion of the professionals. In this month’s edition, INTERLIRA analyzed the top five risks under the Brazilian scope, and next month, the remaining five will be presented and debated.
The report categorizes 25 major risks across five areas: Health, Environment, Technology, Economics, and Society. Key risks identified include climate change, geopolitical instability, cybersecurity threats, AI and big data risks, and social tensions. Climate change was ranked as the most significant global risk, with experts emphasizing the need for substantial investments to mitigate its impacts. In Brazil, extreme weather events, such as severe droughts and flooding, have already caused significant damage, highlighting the urgency of addressing these climate risks. Geopolitical instability, the second top risk, particularly tensions from the Russia-Ukraine war and regional conflicts, also poses challenges for Brazil, though its food and energy production capacity could offer strategic advantages.
Cybersecurity, the third top risk, is a growing concern in Brazil, where the country ranks second globally in cyberattacks. With increasing digital dependency, businesses must bolster their cyber protection measures. AI and big data, the fourth top risk, also bring new challenges, such as the spread of disinformation and the rise of virtual fraud, exacerbated by the increasing use of smartphones and social media. Social tensions, the fifth top risk marked by political polarization and inequality, are creating instability in this South American nation. The country has seen political violence and protests, fueled by misinformation and radicalization, with criminal gang activities spreading across urban and rural areas. Companies must stay attuned to these risks, assessing the political and social climate and adapting their strategies to protect operations and assets.
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The Survey
Every year, companies dedicated to managing risks that can affect companies and institutions try to understand the global context and the ever-evolving scenario of risks to assume the best position considering the expert’s forecasts. AXA’s Future Risk Report is among the surveys’ most highly regarded.
The document is in its 11th edition and gives readers a global overview of the future risks perceived by a panel of more than 3,000 industry experts from 50 countries. Among the 25 different risks presented to the respondents, five had to be chosen and ranked. They were divided into five categories: Health and medicine, Environment and energy, Technology and data, Economics, finance and business environment, Society, politics and regulation. The participants were from Europe, Asia-Pacific, Americas, and Africa.
As an exercise of analysis, the survey results were used as guides to check how the top 10 risks manifest themselves in Brazil. This kind of study works as a reference for everyone, especially those dedicated to managing businesses to anticipate, prevent, and reduce risks.
Climate Change
AXA’s report reveals the consistent perception of climate change as the main global risk. Experts across all four regions rank the issue as society’s main problem. And it has been at the top at least since 2018, except for 2020, when pandemics and infectious diseases rose abruptly from the eighth place due to COVID-19. The document also highlights that mitigating climate change will require massive investment, but failing to invest will result in much greater costs. Estimates by the Potsdam Institute for Climate Impact Research point to global yearly damages that can range from 19 trillion to 59 trillion dollars by 2050.
In Brazil, recent disasters have drawn attention from the authorities to the already visible impacts of extreme weather events, which according to studies are impacts of climate change that led to an extreme El Niño, which caused a significant reduction in rainfall in the North and the Northeast, and an increase in rainfall in the South region.
In 2024, disasters in the North and South of Brazil were reported, with deaths, displacement of families, destruction of various properties, interruption of economic activities, and obstruction of highways, streets, airports, waterways, and other logistical routes. In the North, an extreme drought led to the reduction of rivers’ level to a historic low, obstruction of waterways, and the consequent isolation of riverside communities.
The drought, which was the worst since 1950, also affected other country regions, reaching 3,978 cities (Cemaden), and led to a general reduction of energy production by Brazil’s main source, the hydroelectric plants, responsible for 53,88% (Aneel). The more expensive option, thermoelectric plants, had to be activated, increasing even more energy prices.
In the South, the opposite scenario was observed, with heavy rains leading to flooding, landslides, and more. In more than a week, an entire state came to a halt after consecutive days of heavy rains that destroyed all sorts of facilities, and essential infrastructures, like highways. The impacts are only now being completely calculated. According to a study published by the Inter-American Development Bank (IDB), losses amount to R$ 88.9 billion.
The impacts went beyond the evident physical destruction of cities. The humanitarian crisis put public services, like health and security, under strain. Thus, additional difficulties arose: the looting of houses and other buildings that had to be evacuated; the theft of supplies donated to victims; cases of violence at the shelters; and the rise in gang conflicts.
Mitigating risks in this scenario demands understanding the local climate and how it can affect business when extreme events occur. When extreme events eventually occur, planning, training, emergency teams, an assistance network for employees affected, and contingency measures will make a difference.
Geopolitical Instability
In the past three years, the geopolitical scenario suffered a great transformation, after the war between Russia and Ukraine broke out. Commercial disputes between China and the US, embargoes, and trade barriers added more friction. Tensions among the most powerful nations rose reaching levels only seen during the Cold War. The risks developed have far-reaching implications, affecting everything from financial markets to regulatory aspects and business ability to operate. Geopolitical pressure continues to hamper any attempt for cooperation at the global level.
In this scenario, Brazil is in a condition to deal well with some emerging geopolitical risks, like the conflict mentioned above. Since the country produces food and energy, it can avoid the worst impacts and serve as an alternative for buyers of commodities and investors. In this case, the growing relevance of BRICS could help the country. However, with the election of Donald Trump as US President, this same factor might present challenges for South American countries. Trump has recently threatened to impose a 100% commercial tariff on BRICS members if they attempt to replace the US Dollar as the primary global trade currency.
Still at the international level, but more locally, other risks pose various threats to Brazil. Instability in Venezuela and Haiti has brought more influx of migrants, an event that has generated conflicts in the past, particularly in the border areas. Venezuela is also entangled in a recent dispute for the territory of Essequibo, which almost ignited a local conflict, amid which Brazil could potentially become a battleground due to geographical factors. Infested by criminal organizations, Brazil and its neighborhoods have now suffered with the internationalization of such groups. Profiting from long and porous borders, gangs like Tren de Aragua, Red Command (CV), and First Capital Command (PCC) are infiltrating nations and demanding that national police and Justice forces start cooperating more and more. One example of this was the violence crisis seen recently in Ecuador, with the assassination of presidential candidate Fernando Villavicencio and the subsequent prison rebellions and widespread assassinations.
Dealing with this condition will require businesses to be prepared to make strategic decisions with even more agility. When choosing the location of factories and other facilities with political alignment in mind. Cost, logistics networks, and proximity to markets will have to give space to the stability of global relations. This should also be thought of when procuring suppliers, and feedstock. Surely, there is no point in finding a good location, stable in terms of international relations, but with deep internal instability due to local security factors.
Cyber Security Risks
Cyber security risks have been appearing at the three top positions since 2018. For four years it came on 2nd and three years on 3rd. When talking about this topic many think of malicious attacks. But nowadays, public and private infrastructure is so dependent on technological solutions, sometimes provided by a few providers, that when one fails, the consequences can be catastrophic. To exemplify, AXA’s report mentions the CrowdStrike outage, in July 2024, which provoked fatal errors in millions of PCs and an estimated loss of US 5.4 billion among the U.S. Fortune 500 companies.
In addition, the nature of digital technology makes risks more fast-paced. Impacts spread more quickly throughout the globe and are amplified. In addition, Cyber-attacks are no longer the product of lonely, specialized individuals, they have become weapons sponsored by states to achieve higher goals: informational warfare, data theft, and more.
When it comes to Brazil, the situation is concerning. It is the second country with the most cyberattacks in the world, according to the Threat Panorama for Latin America 2024. In 12 months, more than 700 million cyberattacks were recorded in the country, totaling 1,379 per minute. Another survey, from Trend Micro, showed that for the tenth year in a row, the country was almost the leader in the global targets list. It lost only to the United States. It was pointed as the second most vulnerable in the world to cyberattacks in the first half of 2023.
In an interview to the Brazilian Reporter, expert Geraldo Guazzelli explains that the issue has several causes. First, the country’s size and the increasing penetration of internet access: there are 249 million smartphones, according to Getúlio Vargas Foundation (FGV). The number of households with broadband has also increased since 2016, from 79.2% to 81.2%, according to the Brazilian Institute of Geography and Statistics (IBGE). The presence of major multinational corporations and one of the most developed financial systems makes the nation even more attractive. Finally, the lasting habit of piracy and the fact that it is an early adopter of new technologies.
In this context, implementing cybersecurity policies, firewalls, antivirus, and data protection measures (encryption and two-factor authentication) is only the beginning. In response, Brazilian businesses must increase investment in cybersecurity. Even though the founding principles of risk management remain the same, speed and preparedness gained relevance. In addition, there is a growing complexity, which lies in the need to constantly rechallenge the approach, questioning the way companies identify, assess, prioritize, monitor, and mitigate risks. Thus a few factors must gain extra attention. Threat monitoring and reporting must be constant. There cannot be badly structured processes and poorly trained personnel. Collaboration with suppliers and service providers is essential since they are often the more fragile connection, through which attacks can come.
AI and Big Data
Digital technology brought humanity to the information era. Now, artificial Intelligence and big data are recognized as a new stage of this development. However, it does not appear without risks to the information itself. Among some of the biggest threats mentioned in AXA’s report are the issue of disinformation and misinformation. The first is content made deliberately to mislead, the second includes false information spread by those who mistakenly believe it.
AI and big data can be used to spread fake news and intentionally alter the course of elections, damaging the democratic process, and undermining democracy. This process has been seen in two of the biggest global democracies, in the US and in Brazil. In both countries, studies have indicated that political divisions, mistrust, and ultimately violence have increased much due to the widespread use of smartphones and social media working in partnership with AI to create images, videos, texts, and much more elaborate and massive fake content about the political world.
These new resources are creating a negative impact through traditional crimes, particularly scams. Since 2020, Brazil has witnessed a surge in this category of illegal activity. For instance, in Rio de Janeiro state, the number of scams reported went up by 191% from 2019 to 2023. Previously, the national numbers were not computed, but after the crime became a serious problem, the government started monitoring the phenomenon, and it disclosed that between 2022 and 2023, traditional scams increased by 8.2% and virtual frauds increased by 13.6%. Criminals have already discovered that they can use AI to create malicious codes from simple commands, allowing novice hackers – and even people without programming knowledge- to create virtual traps to attack companies and users. Some AIs can mimic someone’s voice and replicate the image of someone important in a conference call, deceiving those on the other side. Criminals in Brazil use this to convince people to transfer money.
Preventive and mitigatory actions in Brazil should come from the public and private sectors. This demands collaboration, the creation of regulations, and could even include an agency. At the same time, the AI itself could be used to identify and combat fake news. Awareness campaigns and procedures should also help companies fight off this problem.
Social Tensions and Movements
In 2024, social tensions and movements rose to 5th place among global risks, reflecting heightened concerns. Only 13% of respondents believe authorities are prepared to address these issues. Key concerns driving this perception include institutional failure, declining democracy, growing inequalities, the cost of living crisis, and social violence. The role of social media, generative AI, and deepfake technologies in spreading misinformation has further amplified the scale and complexity of these threats.
Brazil provides a vivid case study of these dynamics. Deep political divisions, fueled by fake news and radical discourse on social media, have led to political violence and terrorism. The aftermath of the 2022 presidential elections saw widespread protests, with supporters of the losing side camping outside military bases to demand the ousting of President Lula. Escalation included a bomb plot at Brasília International Airport in December 2022, aimed at inciting chaos to justify military intervention. More recently, in November 2024, a disgruntled individual detonated explosives near Brazil’s Supreme Court, killing himself.
Beyond political instability, Brazil grapples with persistent poverty and inequality, particularly in urban favelas controlled by criminal gangs. These organizations, notably the Red Command (CV) and First Capital Command (PCC), dominate territories, orchestrate violence, and expand their influence nationwide and internationally. Gang activities, including shootouts and disruptions to public life, are now rampant in the North and Northeast regions.
In rural areas, land disputes exacerbate tensions. Indigenous groups, the Landless Workers Movement (MST), and quilombolas face encroachments by farmers, illegal miners, and loggers. Weak enforcement, corruption, and high profits from these activities ensure that conflicts persist despite government interventions.
In this volatile context, companies must stay vigilant, assessing societal trends to inform decisions. Political instability can lead to protests, regulatory shifts, or radical decisions. Urban and rural violence requires tailored security measures. Engaging with political stakeholders and monitoring developments are critical for preventive and mitigatory strategies, helping organizations adapt to a fast-changing landscape.
