Short-term thinking and cognitive biases at all levels are leaving companies and governments vulnerable to widespread and long-lasting impacts of emerging risk trends such as geopolitical shifts and climate change, according to a report from FERMA.

Produced by FERMA’s foresight committee, the New Exposure Trends Report highlights several systemic barriers within organisations and governments that it says hinder long-term risk management, leading to reactive rather than proactive approaches. These barriers include the prioritisation of immediate gains over future resilience, which is driven by multiple factors including market pressures, regulatory constraints, and operational priorities.

Behavioural economics – including biases such as status quo bias, optimism bias, and groupthink – also contribute to resistance to change, according to the report, as well as an overestimation of the ability of companies to manage risk, and a tendency to prioritise consensus over critical evaluation.

The report identifies four medium-to-long-term risks with the greatest potential to disrupt European businesses; geopolitical shifts; technological acceleration; human capital; and climate change. The report says that risk managers should establish a longer-term risk horizon within their organisations and actively counter cognitive biases to strengthen resilience at both the company and societal levels. The report proposes several complementary strategies for developing risk frameworks to address emerging risks.

Charlotte Hedemark, president of FERMA, said: “By their nature, emerging risks provide sufficient time for companies to identify, monitor, and mitigate the associated threats. However, short-termism and cognitive biases embedded in corporate and governmental decision-making mean that we remain unprepared for these high-probability, high-impact exposures. It is critical that companies and institutions adopt a more proactive, long-term approach to risk management to bolster resilience and successfully navigate an increasingly volatile global landscape.”

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