The world really is more unpredictable than ever - two ‘chief risk officers’ explain why

Robin Pomeroy, host, Radio Davos: Welcome to Radio Davos, the weekly podcast from the World Economic Forum that looks at the biggest challenges and how we might solve them. I'm Robin Pomeroy.

This episode of Radio Davos is also a live streamed discussion produced in collaboration with the Forum's Strategic Intelligence, which brings together expert insights and live discussions to help forum partners and digital members better understand the trends shaping the future. That's what we're doing on this episode.

On this episode, we're looking at global risks and how companies and organisations can prepare for them. I have a co-host for this episode and this session, Mitali Chatterjee, manager of global risks at the World Economic Forum.

Mitali Chatterjee, Manager, Global Risks, World Economic Forum: Hello, Robin, and an absolute pleasure to be here. Today, we are here to talk about the work that Global Risks Initiative does, our flagship publications and our latest publication, but I'm sure more to come in the next one hour.

Robin Pomeroy: Exactly. We've got two great guests who will join us online in a moment.

When it comes to risks and the work that you're involved in, the team you work with, here at the World Economic Forum, the report I'm very familiar with is the Global Risks Outlook, which is published every January, just before the annual meeting in Davos. The report we're going to be talking about today is different from that. Tell us about these two reports.

Mitali Chatterjee: Yeah, absolutely. So firstly, let me start with what we do at the Global Risks Initiative. So we try to create a shared and deeper understanding of both emerging as well as systemic risks that impact organisations and economies, and help them build resilience in general.

Now, there are two aspects to it. One is the Global Risk Report, which looks at the macroeconomic implications of the risks landscape across five categories. It is societal, economic, environmental, technological, and geopolitical. And we do this over a one year, two year, and a 10 year time frame.

And then we also have another report which we have just launched called Risk Management Reimagined. Now, this report looks at more the microeconomic implications of the macroeconomic risks that I just spoke about, and that too at a firm level.

And why do we do that? It is because organisations today are trying to navigate a very complex risk landscape, where risks do not appear one at a time.

So I'll give you an example. So we all know that currently the ongoing Middle East conflict has resulted in constraining energy availability and raising prices. So there goes a geopolitical shock. There could be a natural disaster. For example, the recent floods and landslides in Nepal. That could result in a disrupting industrial supply chains. There could a cyber attack which disrupts business continuity.

And the thing is that all these risks are not happening sequentially. They are happening simultaneously. And that is the reason why we need to look at how organisations are trying to deal with these risks, this complex web of risks, and that's what we are doing in our latest publication.

Robin Pomeroy: Yeah, and before we introduce our two guests, just before I came in the room, I had a look back on the global risks outlook from January. There'll be a new one coming out just before this Davos in January, 2027. It's very interesting because some of the risks, particularly the long-term, the systemic risks don't actually change. Climate change is a risk. Unless the science suddenly changes, we find out something new, pretty much the risk is the same. It does reflect what attitudes there are to that risk.

And in that last risk outlook, the Global Risks Report 2026, geo-economic confrontation was the thing that had really come to the fore and concerns about interstate conflict. And that was before, a couple of months before, the war in the Middle East, which you've mentioned there, has added to all those other risks in terms of supply chain, this, that and the other.

It's really worth looking back on that one. AI anxiety was one that soared up through the rankings. I think AI as a risk is probably changing day by day, week by week. But certainly the attitude of the people you survey for these reports show it'd be very interesting to see where that drops next January.

So urge you to look at this report on risk management and then that more macro report, the global risk report. That said, let's turn to our guests. Tell me who they are.

Mitali Chatterjee: Absolutely. So we have a stellar panel joining us today online. So we had Natasha Fields, who is the Chief Ethics, Risk, and Compliance Officer at World Trade Organisation. And we also have with us Torben Oeder, who is Group Chief Risk Officer at Volkswagen Group.

Welcome, Natasha and Torben. It's an absolute pleasure to have you here with us.

Robin Pomeroy: Great to see you.

Natasha Fields, Chief Ethics, Risk and Compliance Officer, World Trade Organization: Thank you so very much.

Torben Oeder, Chief Risk officer, Volkswagen AG: Thank you. Thank you very much for having us.

Robin Pomeroy: I want this to be just a really involved discussion. Feel free to leap in, either of you. Kick us off with a question, though, please, Mitali.

Mitali Chatterjee: Sure. So let me ask a question to both of you and feel free to answer. If we would broadly classify risk into three categories, it would probably be known knowns, known unknowns and unknown unknowns. Now while the former category of known known is the one that we can best predict probably using historical data. How do you really tackle the other two categories of risks that is known unknowns and unknown unknowns? And can you give us some examples from your respective organisations and industries?

Torben Oeder: Maybe just from my experience within the Volkswagen Group. Of course, we come from the experience of the known risks, let's say. It's very easy to, let say, calculate them in terms of probability of occurrence or potential financial impact.

But as you said, Mitali, it's always a challenge when it comes to the unknown unknowns. What we do there is we try to identify signals and focus on the signals that are out there, focus maybe on what administrations and leaders all over the world are stating in their official releases and what they are doing, and try to reduce the noise.

Because also from the media, there's a lot of noise. And we have to always reduce that one in order identify really the signals in order to identify where the world is leading.

You were just referring to the geoeconomic situations that is increasingly the situation and the risk landscape all over the world. And that is what we are really closely monitoring in terms of different kinds of signals, whether it's how many ships are going through the Strait of Hormuz or really what are the world leaders saying and stating.

Natasha Fields: And if I may add to that, completely in agreement with you, Torben.

I would like to say we are in the age of unpredictability. We can no longer predict as risk professionals, as organisations, with any sort of degree of certainty as we used to before, what's coming. And those unknown unknowns, as we like to say, how do we react to them is the question that I think all businesses and all risk professionals want to get to.

And it's about those signals, completely in agreement with you, Torben. It's about the signals, watching other things happen, but not looking at them in isolation. But looking at how it interacts and that interconnectivity between these signals that we're seeing, because they're not known risks at the minute.

And then doing some kind of scenario planning or analysis or making some assumptions. What do we do if it goes left or right or we don't know? How can we actually still safeguard what our priority is, if it's for profit or not for profit. Back again, it's that looking at those signals and thinking in advance, how do we respond if these signals are telling us something that we can't determine just yet.

Robin Pomeroy: Had a great question from Paula Gonzalez, who is asking, could you share a bit more about how you identify and monitor emerging risk signals? Are you using AI or machine learning to scan and detect patterns across large volumes of data? And if so, how do you reduce the noise, which is what both of you have just been saying, and distinguish genuinely actionable signals from weak or irrelevant ones? Do you, either of you, use AI to kind of model what could be potential future scenarios?

Torben Oeder: As much as we can. As much as we use AI.

There are different ways of using AI. Of course there is pattern recognition where AI already in the past helped us a lot reducing the noises for example. Also with reduced head counts everywhere in the industry, you've got to find ways in order to, you know, look, see your way through the jungle. And therefore, AI definitely helps us a lot.

Are we at the end of the stage? Definitely not. It will even increase and also the Risk Report also gave us a good example of how the world in risk management will look like in the future, where you come to the office early in the morning and then look at what the AI produced for yourselves. But then human judgement always comes in because you cannot rely only on AI because human judgement is really crucial in terms of. You know, which way to follow and then which way also to lead the strategy of each individual company.

Natasha Fields: No, I completely agree. A lot of the work that we do at the WTO, the World Trade Organisation, for example, just published in the World Trade Report is based on that data. It's founded on data and AI helps. We're probably not as far along as probably some others. But it's about that human interaction of human interpretation of that data. But AI does help that modelling. It's the answer to the question really is yes, using that quantitative analysis, but having the human interpretation element in it, very, very key.

Mitali Chatterjee: And just to give you a bit of context, our recent report which was just launched, the Risk Management Reimagined one, which by the way, we crafted with our chief risk officers communities, so Torben and Natasha were very much a part of it, so we were trying to answer this exact question, you know where is it that AI comes in comes in use and where is it that human judgement comes in and what are the intersections between the two?

And we realised that there are certain things like anomaly detection, monitoring, aggregation, pattern recognition, these are tasks that AI could probably take a lead on, while things that require providing context, strategic decision making, holding accountability, ethical judgement, that's where humans could take the driver's seat.

So while many people would say that the lines are blurring between the two, how do you really decide who does what, I think there's still a case to be made.

Robin Pomeroy: We had, all three of you have already answered another question that's come in, from Rakesh Khurana saying, could it be that the expansion of analytical capability has come at the expense of other forms of institutional intelligence, e.g. practical wisdom? I think what you're saying is not really. I think the application of AI in some jobs, we've kind of, what's the word, we've tasked AI with writing our emails, or writing, maybe drafting our reports. In this case, it sounds like, no, it's a starting point and you can model and probably do lots of calculations for you, but that human input is extremely important. I don't think it's wiped that out at all. Would you agree with that?

Natasha Fields: I absolutely agree. Absolutely agree with that. The human element is so key and so fundamental with the analysis, it gives you that raw data. But without understanding the history of what what's behind the data and what are those other things that are not actually speaking to the data, and that's where we need the human element.

So absolutely, yes, I agree with you. AI and that data intelligence is great, but the interpretation and the manipulation of that data is that's where the human element and the experts come in and those kind of be replaced at the minute.

Torben Oeder: And to add up on this, sorry, but I think that's also a very important point, at the end of the day, each board, no matter what company one is working for, is liable on their decisions. And that's human decisions that the board is taking.

And I think from risk management side, that we can support that, but it's a human judgement of which way the board has to decide which road they will take. And it's also from a liability point of view, as I said, it's no way that AI will replace risk management, for example, in total. This will not happen. There's always got to be that human judgement.

Robin Pomeroy: Let's go to our audience again from Lutfi Siddiqui, who says, we've seen some dramatic risk events flare up in recent months. Please give us some concrete example of such an event and how your risk function has responded differently from how it would have responded a couple of years ago.

I mean, I was going to ask you, Mittali, you already mentioned the war in the Gulf. You've mentioned the floods, that kind of landslide in Nepal - things which you could potentially imagine, but here they are suddenly on your plate. Most of us aren't chief risk officers. I'm not entirely sure day-to-day what you do. What do you do in a situation like that? And as Lutfi's asking, give us an idea of how you walked yourselves and your organisations through an event like that and maybe tell us if that's changed from what it would have looked like two, five years ago.

Torben Oeder: I think in the field of geopolitics, because I think that's a very good example. When we look back five years, it was more or less stable. We know the different poles all over the world. And now with also having the Chinese being very, not only educated, but very strong in their economic fields. And in the automotive industry, they have taken the lead in several technology fields that matter to our industry and automotive.

Now, for example, the Chinese are protecting also this lead by just in this year, they launched a couple of of new export regulation, regulatory topics. And for example, Europe is now responding with their Industrial Accelerator Act where this made in Europe idea has to come to life.

So what does that mean for our automotive industry? Those days where you develop, let's say, one car and then sell it all over the world, those days are just over. So, when we have this new geopolitics and geoeconomic poles all over world, then you have to adopt your business model and make it way more localised in terms of regional sourcing, regional development, regional sales, regional whatsoever, regional production, in order to be more resilient and find your way through this world of uncertainty as you all already mentioned.

Robin Pomeroy: Let's stay on cars and we'll come back to the WTO in a moment. Just interesting, where you kind of gather your intelligence from, you might be going to people on your board or within your company and saying, this is happening. China has just done this. I imagine that happens. But also, you probably get colleagues who are coming to you who are saying, Torben, this is a massive new risk now. Or it's coming. I can see this coming in two months' time. Is it a combination of those things? I mean, day by day, how does it look to you?

Torben Oeder: Yeah, it's really day by day. This is why I like risk management so much, because you're, let's say, the spider in the net. You have your intelligence. I have my risk management team all over the world. This is also Volkswagen being a global company, there are risk management functions all over the world, as I said. We have different brands.

Of course, I have colleagues who call me from, I don't know, a purchase department or whatsoever when they report something to me. So this is how we come up with the overall risk situation, overall risk landscape.

Robin Pomeroy: Should we move to trade, global trade, WTO? I have a question for Natasha. Simply, what risks at the World Trade Organisation concern you the most?

Natasha Fields: Generally, it's about fragmentation. That should be no surprise. It's fragmentation of the world economy and how that's filtering into geopolitical and technical blocks and the impact that that is having on weakening the multilateral trading system.

The impact that is having on reducing trade growth and economic growth for everyone, for all economies and all countries.

Having said that, yes, it is the one risk that we're really focusing on now and we're very concerned about. Notwithstanding that, we still see that there's an opportunity of everything that's happening and the fast-paced moving world that we live in. What we are seeing is that global trade is still working. 75% of global trade is still operating under the WTO rules and agreements that have been in place for many, many years.

So there is still that level of hope, but there's still work to be done, because 75% is not where we were last year. But there is hope that we're still doing it. But the implication of that fragmentation is a bit concerning.

Mitali Chatterjee: And Natasha, if we were to move from the most important risks that you face to the risk management techniques more specifically, I'm just curious to know how are the risks that you faced in an international organisation or the risk management techniques in an international organisation different from that in a private sector organisation? And this could be in terms of differences in access to technology, resources, manpower, toolkits, models that you develop and validate, you know, anything that comes to your mind.

Natasha Fields: Yeah, that's a good question. So traditionally and historically, risk management started in private sector before it did in multilateral organisations or in government departments generally. That's a general statement. So you have private sector that was already ahead of the curve in terms of its embedding, its development, its putting in frameworks and everything else.

Now you have the multilateral organisations, international organisations as a whole, that are keeping up to pace with that.

The differences probably comes in, of course, the objectives of private sector stakeholder benefit, as well as investment in ensuring but that's delivered and you have the international organisations that are more public sector-focused and driven, and the geopolitical strains on that because it's member-driven.

So you have those differences, but because of that, you have the implications of budget and cost and development in these systems. By and large, private sector has more budget to put on risk management, risk management and bedding and development and international organisations less so.

That doesn't mean that international organisations are behind, there are some that I know are world-class and really leading on risk management but it's just on a whole just a little bit behind and less responsive than the private sector is.

But I think this conversation and these sorts of connections that we've been making in the profession about sharing information, about sharing how we do things, how are we actually going to do that horizon scanning between private sector, public sector and how we can actually give benefit is helping. And we can only get better by working together in the profession, I think.

But there is a difference. The difference is because historically, private sector was ahead of the game and they had more resources devoted in terms of the size of their teams, the systems that they used, the tools that they use. However, international organisations are coming online as well.

Robin Pomeroy: And, Natasha, so when a big news event happens that's going to change the risk outlook for everything, including global trade, do you wake up in the morning, a war has broken out, for example, rush to the office and kind of deliver your assessment of how that's impacting? I mean, how does it kind of physically walk and talk when the story has, suddenly the narrative's changed. It's one of those unknown unknowns. We weren't expecting that, or it could have happened, and now it has happened. What does that do? Do you go and, you know, readdress those computer models again, put a different scenario together? What do you actually do? Maybe, you know, Torben, also feel free to jump in if you want to tell us how you do that.

Natasha Fields: I do have to say we have a very great team of economists in the WTO and they do that modelling and they've actually done that modelling and it's part of the World Trade Report that has recently been released where they actually show models of what will happen if this happens if that happened.

For example, with, in recent times, when there was changes of tariffs, they actually did a lot of modelling for member countries to understand if it goes left, right, or stays the same, how is that going to impact on that particular member country.

So yes, it's a lot work, and yes, sometimes it can be very reactive, but there should be some sort of plan in the background, some signal that we were getting anyway, that we may not have gotten it right, but we'd have had an idea of how that is going to impact on the global economy, on members, and on world trade as a whole.

So that is something that does happen, that is led by our chief economists, because they use the more economic background of that rather than from a risk perspective. And they're very, very granular on how they analyse the impacts of that, of whatever has just happened last night or today on their models.

Torben Oeder: Yeah, maybe for the Volkswagen Group, what you described, Robin, is like my dream, and that's where I'm trying to lead my team to. Unfortunately, Volkswagen is that big that we have so many specialised departments. We have someone who are dealing with the macroeconomic types, then we have purchase department and all that stuff. Hopefully, we have seen that in the signals before that something happened, so we can really prepare for because that's the job of risk management, not act when something already occurred, but be ahead of the curve. That's what we're always trying to aim at.

But then when it comes to, okay, something happened, Torben, what is the impact for the Volkswagen Group? I would say, as also being the spider in the net, we are really good at you know collecting the data from the respective and responsible departments really really quickly and giving them like the right answer of what the impact of the of our industry for our industries and for our brands are. But we're not there yet at the target state. I have to admit that I'm working on it.

But this is also where risk management has to change. I mean, we're coming from a world where you have like on a quarterly basis, a risk report. And this definitely, risk management, has to evolve or has to evolved to a situation where you had like ad hoc impact analysis is at hand. And this is where the industry is leading.

Robin Pomeroy: Is it a more changeable world now? I think every generation thinks, oh, this moment in history. But if you look back, Second World War breaks out, First World War, it's always been a crazy old world. Is it really today a riskier or more changeable world than it was?

Natasha Fields: I definitely want to jump in and say yes.

And the reason for this is I think historically there was one particular event that could have been a major one, but it was one at a time. The difference that I think we're seeing now, and this is why I like to call this the age of unpredictability, is because they're not coming in a unitary form. There is multiple risks that are materialising or that's coming to a crescendo all at the same time.

Or if there's one particular risk because it's impacting so many different aspects of the globe, how do you manage that?

And I think that's the difference. And also the changes previously, we would have been able to predict with some sort of certainty, some sort that this is going to come.

For example, in years before COVID, one of the risks that I always had on the risk register was a risk of an epidemic or a pandemic. I had no idea what COVID was, but that's just using the data that, you know, it was coming around. The world has moved on from that, and the risks are materialising or may materialise. Not only are we not aware of them, but we don't understand, or we don't have the visibility of how it's going to impact multiple streams of, be it geopolitics, technologically, public health, food and water supply, it's all having impacts everywhere.

So yes, I do think we're in the age of that big change.

Robin Pomeroy: Torben, do you agree if you were in a spider's web 50 years ago, would it have been shaking a little less often than it does today?

Torben Oeder: Yeah, yeah, definitely.

And especially, I would say, for the automotive industry, it was also not that risky. I mean, if you look back 50 years ago, a car in Germany would cost for roughly, let's say, one third of a yearly salary. That was the amount, or the car price, for a usual German citizen.

Nowadays, and if you look at the car prices, they increased very much, unfortunately, different reasons for that. But now it's more like a 10-month salary that a car costs from a yearly salary of a usual worker.

So the reasons for this are different regulations in terms of emissions, in terms of safety, increased material costs, increased energy prices, all that stuff that leads up to better cars, more safer cars, more cleaner cars, all of that. But at the end of the day, the market is reduced and it comes to different crisis, all occurring at the same time as Natasha was stating. This leads up to this very unusual situation we're living in.

Mitali Chatterjee: And Torben, just to continue on that point, I'm sure inflation is one of the biggest risks that your industry is facing at the moment, but it's not only about the price of cars getting higher and higher as compared to before. As you mentioned, it's also about the cost of raw materials going up, but it's also about vehicle financing becoming much more expensive than it used to be. And also, I think there could be some unique risks because emerging markets, for example, could be undergoing currency depreciation, which makes it even harder for you to sell cars outside the base economy. So are there any unique risks to the automobile industry that you are trying to mitigate as part of your risk management function.

Torben Oeder: Yeah, I was touching upon that a little earlier when I said you have to be definitely more localised. I mean, back then you could use scale effects. You had like one car developed and then produced where it was, let's say, where you had all the scale effects for each and every single individual part. Nowadays, you have be more localised and that also adds up to higher material costs. At the end of the day, but you just have to do that. And then because you have to be more resilient and don't be dependent on geoeconomics, for example, and geopolitics, you have to be resilient in order to be able to sell your vehicles, your products all over the world at the same time.

Robin Pomeroy: We've got a load of really interesting questions. We're not going to be able to get to all of them. But here's one that I'll synthesise a couple of questions together.

So much of modern industry has been organised around efficiency, optimisation, standardisation, best practises, and the elimination of slack. But does this mean companies, organisations, may have undervalued their institutional resources and made adaptation less possible? So has that pursuit of efficiency, cutting of fat in an organisation, made it harder for organisations to analyse risk and perhaps much more importantly, to react and mitigate risk.

I hear deadly silence. So I'm going to ask Natasha, what do you think? You're looking across industry globally. There has been a drive to efficiency. So are organisations now too slimline to actually deal with risk effectively.

Natasha Fields: I don't think so, generally I don't think so. Of course it depends on the context of the organisation, but generally I don't think so.

I think it's an opportunity to start asking those what-if questions. So now that organisations have gotten to that place of efficiency and it's a well-oiled machine, it's even more critical now to ask those what if scenario questions. What if these dependencies and these critical factors we have fall apart and this is where risk management comes in.

So it's even more critical time. I think it works hand-in-hand with each other. Efficiency is great. It allows organisations to meet their objectives probably faster in the world of artificial intelligence and making things easier to work with to help decisions reach faster. This is all great.

The part where risk management adds that golden line or that thread is how do you maintain that efficiency, maintain resiliency when it's an unknown world? And how do you do that? It's by asking those what if questions, using those scenarios, using risk management as a tool to help you maintain efficiency. So I think it works hand in hand.

Torben Oeder: And the good news is that also when I talk to my peers in the industry, those questions are being asked, those what if questions, because of this world of uncertainty. And that is why we are now being asked and have a seat at the table when it comes to strategic decisions.

I mean, also a couple of years back then, when I remember correctly, there was this GRC [Governance, Risk, & Compliance] approach with risk and compliance and. This developed over time and in this world of uncertainty, it becomes way more evident that risk has a seat at the table when it comes to strategic decisions on where do I have to lead my company.

Mitali Chatterjee: But if I were to be a devil's advocate, may I ask one of you to answer, in this trade-off between efficiency and resilience given the current geopolitical context, what is winning? Which of these two are in the lead?

Natasha Fields: What we would like to win is probably different from what is happening, I would say. I think the focus for everyone is on resilience, and that's because of all the changes that have been happening within recent years, and will continue to happen. Change is here to stay. So I think everybody will want to say resilience, because that's where the focus is.

But to get to the bottom line, or to get to whatever your objectives are, people will naturally be looking at efficiency. But they would want to do that.

I'm not answering your question directly because I don't think organisations are, one is winning over the other. It's that very delicate balancing act.

Resiliency is so important in this world of unpredictability, but you have to do it by being efficient. So I don't know if one is wining or the other, I think there's more focus possibly on some industries on resilience, especially manufacturing because of supply chains. But there's also that efficiency that has to come in there. So I think it's a difficult question. I don't think there's one winning over the other.

Torben Oeder: Also, from my experience, I would also say, first of all, the line, especially as a European car company right now, is efficiency, cost reduction, and to be compatible at the end of the day with our competitors.

And I would always call it the hit rate, when I talk to my team, the hit-rate of topics that are really highly probable that they will occur. And when I talk then to the board of management and in order to implement some measures that costs money resilience costs money it doesn't come for free if we you know supply chain if we have like a second supplier that costs many because you lose scale effects you have to develop it maybe twice so that comes with a high price but if the board then then relates to me and says, Torben, how sure are you that something will happen? And then it comes to human judgement, as we had before.

But as I said, this hit rate of topics that I put on the table has to be very high. And then resilience, then the board is happy to spend money on those resilient measures. But it has to have to be balanced.

Robin Pomeroy: I'd like to ask a couple of questions on particular types of risk. And one member of our audience, Gautam Puri, is asking, how are environmental issues in global situations navigated from a risk management perspective?

Before I ask you to answer that, I'll just note that in that annual report that comes out in January, the Global Risk Report, worries about war and conflict and worries about AI had suddenly pushed a lot of environmental concerns out of the short and medium term risks.

But in the long-term risk, which we define as 10 years, it's still, it's not just the number one risk, climate change, it is the number 1 and 2 and 3 risk. Those being extreme weather events, biodiversity loss and critical change to earth systems.

Ten years away and when you've got all these other perhaps more urgent things, if you're under the bombs or if your supply chains have been cut off, maybe you're not worrying about environmental. But then we see something like Nepal, a landslide happening with terrible risks, both for human life, for the economy of the area, for the water supply of actually an enormous part of that part of the world. Where do the two of you see environmental risk, which often gets pushed away from the near term? Which one of you wants to go first on the environment?

Natasha Fields: I'll go first and I'll just say I think my opinion personally in terms of ranking and rating them, they should be higher. I think that they are underestimated. If we just look at the risk of El Nino and the impact that El Ninos going to have when it's fully on board, I think it's underestimated and it's not because the scientists are underestimating the phenomenon. I think it's because we as risk professionals and businesses and boards, we are underestimating the cascading effect that these climate risks, for example El Nino is going to have on other aspects such as geopolitics, such as food and water supply and food and to insecurity.

So I think there is a large scale underestimation of climate risks and currently in particular El Nino.

Robin Pomeroy: Toben, you're nodding.

Torben Oeder: Well, we have the perfect answer. Also, just to add up on this, I think environmental topics. Are a little bit more predictable, I would say, because we know that they are coming. It's slightly increasing. Of course, we don't know where El Nino is going to, of course, but we know it's coming. Let me put it that way.

And then when it comes to our supply chain, yes, we are looking as much as we can in order to where are our suppliers located. So if a storm comes up, of course we have an early warning system and also talking to our suppliers, hey, something might come up. Maybe you should increase your inventories, for example, for a short amount of time. Maybe we have a different supplier, how we could use that. So, and also when we work together with a supplier, that's part of the proposal of the supplier of how he deals with those environmental topics.

When it comes to our own assets. And when it comes to, let's say, long-term water shortages on the one hand, because it also consumes a couple of litres to produce a car, that is something we already have on our radar. We try to work on that and reduce the number of water that we need in order to produce the car. That has to be reduced. And also when it comes to water shortages in terms of what it does to the soil in our production facilities. Because also if the soil is shrinking and there might be some eruptions, we're also already looking at those topics in order to be also there more resilient.

But I would say in general it's more predictable. That's more on the long term because of the climate change is there. And we can adapt to that. We have time for that. It's different than like a landslide. Then it's very hard to predict.

Mitali Chatterjee: And just to add to that, a more philosophical take, if you may, we as a society tend to be very myopic about things. So when you think about climate change, environmental risks, you automatically tend to think that it's a long-term risk. It's not going to impact our generation.

So you tend to say that we'll think about it when it comes.

What we do not realise is the interconnectedness associated with these environmental risks. You have extreme heat, that is going to cause power disruption, that's going to delay productions, that's going to impact the supply chain, it's going raise prices, it's going to weaken demand, it's gong to create liquidity constraints, and it's go to set off this vicious cycle which cannot be reversed.

So, I think somewhere we're all to be blamed because we read these reports saying that, oh, this is going to happen in the next 200 years, we're going to go extinct, but we ask ourselves, are we going to be alive for the next two hundred years? Maybe not. So, maybe let's think about it ten years later.

Robin Pomeroy: Right, well, the other area I wanted to ask about, which might be related to, are we going to be around in 200 years' time, is, of course, artificial intelligence. Talk about known unknowns. I mean, just this year, people's, you know, the civilians among us who aren't on this all the time, either working in AI or working in risk management, we've seen that conversation just evolve so much over just the last 10 months.

Where does AI fit in? There, because there's so much, you know, from job displacement, but then there's things about the environment as well, and there's thing about the misalignment, as the euphemism, basically, the robots going bad on us. It still seems so science fiction to so many of us, but we know from what's happened over the last few months, it's not. It's already, hacks are happening by AI agents, for example, cyber security. So much about that is about AI.

So I don't know, again, Torben, do you want to say, are you looking at the risks from AI? They might be as difficult to forecast as some of the climate change risks, but you surely have to be looking at them, don't you?

Torben Oeder: Yeah, of course we're looking into that. But I'm a huge fan of using AI and the possibilities and opportunities that we have just by the tools that are out there already right now. This will even increase over the next couple of years.

But in general, I think that this topic of AI is a little bit overhyped, to be quite honest, because as we also stated earlier, here in this meeting, there will always be this human judgement, and this is this is evident for me, and that's why I'm just pushing as much as I can in order to use AI.

Yes, as I said, there comes a lot of risks with it when it comes to cybersecurity. We all read the news on that, that it finds vulnerabilities, but this also helps a company to be more safe at the end of the day, because if you know where you're vulnerable, then you can work on it and close that gap.

Natasha Fields: And if I may weigh in here, so I think it depends on the context and the organisation that you work in.

We are a little more cautious because we deal with very confidential information about agreements, about disputes in global trade. So we need to have great assurance that the use of AI is not going to impact the security of our data. The confidential data that we hold.

And that's something that we're battling it and we're managing with that as we go along and that s fine. But I think, put the WTO aside for a minute, the question that I have been coming up with recently and I think this is something that all organisations should look at, the question is not just what are the risks to AI or of using AI, the question then becomes, what is the risk of not using AI when your competitors are, where they're becoming more efficient, they're coming more resilient.

And I'm not saying that everybody should just go out and just, you know, just be very easy about it. But it's one of those conversations you have to weigh up the risks of using it and the risks of not using it. But it really depends on the context in which you're operating in.

Robin Pomeroy: We're coming towards the end of our time. Is there a note of optimism? We always like to end on that from the three of you. Actually, that was pretty optimistic from both of you on AI.

Mitali Chatterjee: I work in the risks team so you really can't blame me.

Robin Pomeroy: I don't expect any optimism there, but, you know, we are living in this turbulent time. Things are changing on the international scene, on the multilateral scene, on trade, if you're in the automotive sector, so much is changing.

Torben, you've said you love being at the centre of this spider's web though, so that's great. I guess the upside of looking at risk is, at least if we know the risk, we can do something about it. But can either of you give us just one line of optimism as we close out this discussion? Torben?

Torben Oeder: Yeah, of course. I mean, I'm risk manager by profession right now, but risk management is not about avoiding risk. Risk management is about taking opportunities.

Because if you identify a risk, that usually does not occur only at my company right now. It occurs to the whole industry. And my job is to, you know, make my company better than our competitors. So I'm always looking for opportunities, first of all, and that's why you always find me optimistic. That's just my nature.

But what really makes me optimistic is that in this world of uncertainty right now, I think the picture in general gets a bit more clearer, and teams are adapting to it. They adapt that this is the new normal, and this actually in general makes me optimistic that we adapt to it and we deal with it.

Natasha Fields: And absolutely the same for me. It's all positive. I'm completely in love with risk management because it allows you to be creative, to find a solution where probably someone else didn't think about.

Sit back, think about the what-ifs and find ways to actually still meet your needs.

It is an opportunity. So welcome to the age of unpredictability, but also welcome to to the to the age of opportunity, of creativity, to find solutions for those things that we're not aware of.

Mitali Chatterjee: And what makes me optimistic is their optimism because I think there is a growing awareness among the risk management functions and chief risk officers in particular that it's not about predicting every crisis, it is about being prepared for a wide variety, various permutation and combination of risks that can manifest at any point of time. So I think we're in a good place.

Robin Pomeroy: And if you want to be prepared for those risks, or indeed you're in love with the whole idea of risk management, you should start by reading the Risk Management Reimagined report.

Mitali Chatterjee: Absolutely. Please do, and please share with us your feedback, your comments, whether you love it, hate it, how can we improve upon it.

Robin Pomeroy: And if you're listening to this on Radio Davos link to that in the show notes.

If you're watching this live, and you're not already following, please do follow Radio Davos wherever you get podcasts. It's a weekly show that looks at the world's biggest challenges and how we might rise to them. Get it on any podcast app or at wef.ch/podcasts where you also find our sister programmes, Meet the Leader and Agenda Dialogues.

If you are listening or watching this on Radio Davos and want to know how you can join an audience for something like this, for a similar livestreamed discussion, you can become a digital member of the World Economic Forum. There's a link to that in the show notes.

For now, thanks to our guests, Natasha Fields of the World Trade Organization and Torben Oeder of Volkswagen. Thanks very much for joining us.

Torben Oeder: Thanks for having us.

Robin Pomeroy: And thanks to my co-host Mitali Chatterjee. And thanks you for watching and listening. Radio Davos will be back next week. Thanks for watching, listening, and goodbye.