ERMC: Governing Risk in a Changing Global Environment

As geopolitical tensions rise, technology accelerates, and financial markets show new signs of fragility, risk has moved from a specialist concern to a central governance issue. For organisations across sectors, the challenge is no longer how to avoid disruption, but how to manage and respond to it effectively.

In this interview, Dr Evgueni Ivantsov (right side), Chairman of the European Risk Management Council (ERMC), reflects on how leaders should navigate sustained volatility. A recognised authority on global risk management, financial stability, and governance, Ivantsov has held senior risk and strategy roles at major international banks, served as a visiting professor at leading universities, and is a regular contributor to the Financial Times.

Uncertainty has increasingly shaped strategic decisions across sectors. From your perspective at ERMC, which risks are most likely to influence organisational decision-making in 2026 and beyond, and how are leaders adapting to sustained volatility?

The global risk landscape is undergoing a profound transformation, driven by three powerful forces that are reshaping decision-making across the financial services sector: geopolitics, technology, and potential asset bubbles.

The world has entered a new era of geopolitical volatility. The post-WWII order and the global security framework, which governed international relations for 80 years, has been dismantled. Unlike the past, the emerging geopolitical framework is defined not by the power of international law, but by the law of power. This shift creates a global insecurity with a far more unpredictable and dangerous environment, where traditional alliances and norms are being rewritten. Financial institutions must now navigate a landscape where geopolitical shocks are not only more frequent but also more disruptive, demanding greater agility and foresight in risk assessment.

Digital transformation, AI adoption, automation, and data-driven processes have fundamentally altered the risk landscape. Two critical consequences stand out: interconnectivity and speed. Financial systems are now tightly linked, with technology embedding itself into nearly every process. This integration has made business operations more interdependent, creating new concentrations of risk.

Due to the digital transformation the pace of transactions and data flows requires real-time risk management and, increasingly, a proactive approach. Risks no longer evolve in isolation; they interact and amplify each other in unpredictable ways, making it harder to maintain a comprehensive, 360-degree view of exposures. As a result, risk managers face a dual challenge: keeping up with the acceleration of processes while understanding how interconnected risks can cascade across the system.

Finally, abnormal growth in equity, crypto, and private credit markets poses another layer of risk. The exponential growth in the valuations of AI companies represents a dangerous imbalance in the equity market. The crypto sector and private credit market have reached unprecedented scale but both operate with looser regulation and less transparency, raising concerns about systemic stability. The combination of high valuations, speculative activity, and limited oversight increases the potential for sudden corrections and contagion effects.

Together, these forces are creating a risk environment that is more volatile, interconnected, and harder to predict. The ability of financial institutions to anticipate and respond to these dynamics will define resilience in the years ahead.
 

"While the ‘tone from the top’ sets the initial direction, it is the ‘actions at the top’ that truly shape risk culture."

Governance and continuity are central to institutional resilience. What role should boards and senior executives play in ensuring strong operational resilience?

To ensure strong operational resilience in an era of increasing complexity and unpredictability, boards and senior executives must prioritise institutional adaptability and the ability to respond effectively to sudden disruptions. Institutional resilience is no longer just a strategic advantage, but a necessity for survival in today’s volatile environment.

This resilience is built on a foundation of a strong risk culture, which cultivates an environment where accountability, risk awareness, and responsible decision-making are ingrained at every level. Employees must possess the right skills and mindset to recognise risks early and act decisively, ensuring that risk management becomes a core part of the organisation’s DNA, not just a compliance exercise.

Equally important is the need for an adaptive and prudent business strategy, set by the board. Organisations should regularly assess the viability of their strategies and ensure that risk exposure aligns with a prudently defined risk appetite. This proactive approach enables businesses to pivot quickly in response to changing conditions, minimising potential disruptions.

The third pillar of operational resilience is robust crisis management capabilities. Organisations require the right tools, such as early warning systems, to detect threats before they escalate. Credible contingency planning, supported by well-trained and qualified staff, ensures that the organisation can respond swiftly and effectively during a crisis. Regular drills and scenario testing further reinforce preparedness, ensuring teams are ready to act under pressure.

By embedding a strong risk culture, strategic adaptability, and crisis readiness into their governance and operations, boards and senior executives can build organisations that are not only resilient but also capable of thriving in an unpredictable world.
 

AI and technology are reshaping how organisations assess and manage risk. What guiding principles should leaders adopt to ensure digital optimisation supports sound judgement, transparency and ethical governance?

AI and digital transformation are fundamentally reshaping risk management processes and decision-making. While AI adoption provides organisations with a competitive edge, recent research by ERMC highlights that effective AI governance is a key enabler of successful implementation. Organisations that establish robust governance frameworks and responsible guardrails for AI adoption are emerging as industry leaders. To achieve this, three core principles should guide their approach.

Leaders must establish a robust data governance framework. This ensures that data across the organisation is consistent, complete, relevant, unbiased, and secure. High-quality data is the foundation of reliable AI-driven decision-making, minimising the risk of errors or misjudgements.

AI deployment governance must be clearly defined. This involves setting well-articulated use cases and objectives, understanding the tools and services available, evaluating potential risks and mitigation strategies, and allocating realistic timelines and budgets. Engaging key stakeholders throughout the organisation ensures alignment and accountability in the AI implementation process.

Ongoing AI monitoring and control are essential. This includes conducting independent audits and risk assessments to identify biases, errors, or security vulnerabilities in AI systems. Prompt corrective actions must be taken to address any issues, ensuring that AI remains ethical, secure, and compliant with organisational and regulatory standards.

By prioritising data quality, structured AI deployment, and rigorous monitoring, financial institutions and other organisations can fully harness the potential of AI while upholding the highest standards of transparency, accountability, and ethical governance.
 

"Unlike the past, the emerging geopolitical framework is defined not by the power of international law, but by the law of power."

What qualities will distinguish organisations that adapt successfully to volatility, from financial institutions to international associations and event networks? How can leaders cultivate a risk culture that supports long-term operational resilience?

The role of risk culture in determining an organisation’s success or failure is often underappreciated. Unlike tangible assets or formal processes, risk culture is an intangible yet fundamental element which is difficult to measure or observe directly, but far more influential than formal risk governance or risk appetite statements. It shapes the very foundation of risk decision-making: the values that guide leaders, the principles employees uphold, and the behaviours that define how individuals respond to risk-related challenges.

Risk culture is not defined by what is declared, written, or documented in policies, mission statements or risk appetite. Instead, it is revealed in how decisions are made and actions are taken when facing uncertainty. It is cultivated not through declarations of values or the imposition of governance structures, but through consistent leadership. The board and senior executives bear the primary responsibility for embedding a strong risk culture throughout the organisation.

While the ‘tone from the top’ sets the initial direction, it is the ‘actions at the top’ that truly shape risk culture. Employees must see, on a daily basis, that risk-conscious values, high ethical standards, clear accountability, deep risk awareness, and responsible risk taking are not just rhetoric but the driving forces behind leadership actions. When leaders demonstrate these principles in practice, they create a culture where risk management becomes an intrinsic part of how the organisation operates.

The reward system also plays a pivotal role. Behaviours that align with a strong risk culture should be recognised and rewarded, while actions that undermine it must be challenged and addressed. Only by reinforcing these values through both leadership examples and systemic incentives can an organisation build a risk culture that is resilient, adaptive, and capable of navigating volatility and unexpected shocks.
 

Published by Meeting Media Company, the publisher of Headquarters Magazine (HQ) – a leading international publication based in Brussels, serving the global MICE industry and association community.