Tracking 2025 geopolitical, AI, inflation and people risk trends at midyear

1. Geopolitical change will continue, and new risks will arise even as current risks are addressed – tracking, as predicted. Business risks in the first half of 2025 included ongoing climate events (devastating fires, floods and severe weather), pivots in rules and regulations, trade conditions and tariffs, financial investment flows, market shifts, property peril, gray zone attacks, wars, shipping and global supply chains, infrastructure, cyberattacks, disinformation campaigns, commodity prices, and employee and executive security.
   
   WTW’s Emerging Risk Survey suggested the complex risk landscape would not moderate in 2025, a point validated by the recent 2025 Political Risk Survey and 2025 Supply Chain Risk Survey. Geopolitical risks continue to rise in priority and attention required by boards and senior leaders worldwide. Effective leaders reassess current approaches to ensure they can navigate today’s operating environment rather than being steered by it. They mitigate risks where possible, change plans when necessary and prepare teams to act quickly and decisively.  
2. AI and new tech development will outpace adoption, yet show additional limitations and risks (increasing the automation paradox) – tracking, as predicted. Generative AI, agentic AI and other new technologies continue to surprise users and leaders in what they can and cannot do in 2025. According to Gartner’s 2025 Hype Cycle report, less than 30% of AI leaders report their CEOs are happy with AI investment return. Additionally, CEOs highlighted that the top two limiting factors impacting AI’s deployment and use are the inability to hire adequate numbers of skilled people and an inability to calculate value or outcomes. Gartner also recently predicted that 40% of agentic AI projects will be canceled by the end of 2027, due to escalating costs, unclear business value or inadequate risk controls, as well as “agent washing” – the rebranding of existing products (such as AI assistants or chatbots) without substantial agentic capabilities.
   
   AI development has experienced setbacks, including those related to accessibility (an increasing number of AI applications performing below expectations), imposters (the ability to use technology does not keep up with developments), and capacities and capabilities (data, skills and deployment abilities have not kept up with the technology). Changing regulations, new lawsuits and cyber breaches confirm it's early days for governance of technology and how AI is used at governmental and corporate levels. Effective leaders continue to shift from relying on traditional risk management and governance to using more dynamic governance models. They also become more realistic about the pace and impact of technology adoption on customers, employees and performance, and recalibrate expectations and commitments.
3. Labor markets, inflation, work arrangements and talent shortages remain in the news – tracking, as predicted, generally. While many elements of labor markets, inflation, work arrangements and talent shortages have continued to stabilize in most developed economies in the first half of 2025, certain aspects remain challenging. For example, inflation in the U.K. increased materially in 2025 from 2.6% in March to 3.5% in April and 3.4% in May (after being as low as 1.7% in September 2024). While this is more favorable than during the peak of 11.1% in 2022, the trend concerns many leaders. Inflation in the Eurozone was 1.9% in May, down from 2.2% in April and up from 1.7% in September 2024. The U.S. was 2.4% in May, up from 2.3% in April and flat with 2.4% from September 2024. Canada was 1.7% in May, flat with April up slightly from 1.6% in September 2024.
   
   When it comes to labor markets, fewer employees are changing jobs, and some HR leaders even report turnover is too low, creating The Great Stay. Yet, permanent demographic shifts, including a baby bust, continue to create long-term talent shortages for certain jobs and skills that could persist for years. Return to offices is stabilizing but remains in the news globally, with real estate and job data showing material differences in work practices across regions, countries and cities. WTW research shows flexible work trends shifting gradually, as almost two-thirds of U.S. companies (61%) have implemented formal policies that require onsite attendance for a minimum number of days per week. Effective leaders continue to monitor conditions closely and implement new talent strategies as boards and senior management teams increase focus on culture, employee experiences and the transformation of pay, benefits and career programs to drive performance in a challenging environment.
4. People risks are at the forefront – tracking as predicted. Board members and senior leaders continue to prioritize human capital, viewing employee health and safety as a top organizational risk, according to WTW’s 2025 Directors and Officers Risk Report. They also remain concerned about talent and skill deficits. Effective leaders know companies with higher levels of employee wellbeing outperform their peers and make human capital governance a core element of enterprise risk management. They view such efforts as a material component of effective business leadership, aligned with company strategy and creating competitive advantage and driving performance. They lead holistic and strategic human capital discussions to consider human capital metrics in the context of performance, productivity and risk. Top people topics for 2025 include developments in labor markets, skill shortages, succession planning, retention, compensation and benefit programs, employee wellbeing (financial, physical, emotional, social) and costs.
5. Inability to plan and increased scenario testing – newly reported trend. During individual and group in-person discussions with boards and senior leaders in Asia, the Americas and Europe in June, 100% of the groups cited an inability to plan as their single greatest business challenge in 2025. Acknowledging the unprecedented disruption of the pandemic and various global conflicts in recent years, they also report that country-specific policy shifts and broader economic factors are making any mid or long-term planning futile. Said one senior executive recently, “We used to have a core scenario in place with a handful of backups, but now we need to have literally hundreds of options on the table and know which one to follow at any given time. And the answer can change daily or weekly and vary by product line or country.”  Effective leaders engage in robust scenario planning to avoid stagnation or delayed decision making, with recent advances in generative AI changing how they approach scenario development.

Looking ahead

The pace of change renders planning as necessary as it is challenging. Leaders who reassess their risk strategies, embrace new technologies responsibly and prioritize the wellbeing of their workforce position their organizations to thrive amid uncertainty.

A version of this article originally appeared on Forbes on July 15, 2025.

Author

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John M. Bremen

Managing Director and Chief Innovation and Acceleration Officer

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